Preamble

The House met at hall-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — EMPLOYMENT

Labour Statistics

Mr. Dormand: asked the Paymaster General what were the numbers of persons unemployed for one year and two years, respectively, at May 1979 and the numbers at the latest available date.

The Parliamentary Under-Secretary of State for Employment (Mr. John Lee): On 5 April 1979, the closest date to May 1979 for which such an analysis is available, the numbers of unemployed registrants in the United Kingdom who had been unemployed for over one year and over two years respectively were 366,700 and 179,800. On 9 October 1986 the numbers of unemployed claimants were 1,341,000 and 844,500. Direct comparisons of unemployment by duration since 1979 are not possible because of changes in the way figures are collected.

Mr. Dormand: Those figures are a disgrace and an affront to society. They demonstrate more clearly than anything why the Government's economic policies are an utter failure. When will the Government realise what a devastating effect long-term unemployment has on a family? Will the hon. Gentleman give an assurance that when he talks about a reduction in unemployment, whether in his statements or in his speeches, he will identify the reduction in the long-term unemployed?

Mr. Lee: We are slowly winning the unemployment battle. The numbers are beginning to fall. In the latest quarter there was a fall of 7,000 in the number of long-term unemployed, compared with a rise of 25,000 a year ago.
Unemployment will not be helped by the sort of suggestion made recently by the hon. Member for Kingston upon Hull, East (Mr. Prescott), Mr. 1 per cent., with his famous training levy. Nothing would make matters worse.

Dame Jill Knight: Does my hon. Friend have figures for job vacancies during a similar period? Does he recognise that unless job vacancies are subtracted from the number of unemployed we cannot get a true picture of unemployment in Britain?

Mr. Lee: My hon. Friend is absolutely right. In the vast majority of areas vacancies are on the increase. Indeed, the figures announced last week show that the overall number of national vacancies was the highest since 1979.

Mr. Leadbitter: The Minister referred to the difficulties of making comparisons with 1979 because of the different

methods of calculating unemployment. Does he accept that the Government know very well the basis of those changes in the calculation? For reasonable methods of comparison, would it be possible for him to place that figure in the Official Report, taking into account the changes that have been made by the Government?

Mr. Lee: A question on that matter will come later. The allegation that there have been 16 changes is misleading and exaggerated. Only six have a discernible effect, details of which were published in the Employment Gazette. Three were minor changes, two were changes in the method of compilation, four resulted from procedural changes for paying benefit and two were to correct inaccuracies.
It is not surprising that the Opposition are becoming increasingly rattled, depressed and dispirited with the unemployment figures and the national opinion polls moving against them.

Mr. Fallon: Will my hon. Friend confirm that unemployment in the north-east, for example, fell by 9,000 last month? Why do Opposition Members not recognise good news, or do they prefer high unemployment'?

Mr. Lee: My hon. Friend is absolutely right.

Ms. Richardson: Of the figures which the Minister gave in his initial reply, what percentage of women were unemployed at both dates? Will the Minister also give an estimate of the number of women who are unable to register because the Government want to remove them from the statistics but who are available for work?

Mr. Lee: I regret that I do not have the figures on women, but about 600,000 jobs were lost in manufacturing during the period of the previous Labour Government.

Restart Programme

Mr. Pike: asked the Paymaster General if he will make a statement on the Restart programme.

The Paymaster General and Minister for Employment (Mr. Kenneth Clarke): The restart programme has been making good progress and by 9 October 366,451 people had already been interviewed. A worthwhile offer that might lead to employment had been made to about nine out of 10 of those interviewed.

Mr. Pike: Will the Paymaster General accept that the programme is not leading to people getting real jobs and that the main purpose of the exercise is to reduce the unemployment figures by false means, which is resulting in many people losing the benefit to which they are legitimately entitled? Is that not a disgrace?

Mr. Clarke: No. That is, first, a wholly unjustified allegation, and it is also a harmful one to make because it damages the morale of our staff who are seeking to help long-term unemployed people whom they invite for interview. It also tends to put off the long-term unemployed people from going in. When people are interviewed we offer advice on how to get into a job, training, subsidised self-employment, a job club or our new job training programme—all ways of helping longterm unemployed people back into the growing number of vacancies and jobs available in our economy.

Mr. Alan Howarth: Will my right hon. and learned Friend accept that the restart scheme has been widely welcomed in Britain as evidencing the Government's


humanity and practical determination in their approach to the distressing and important problem of long-term unemployment? Will my right hon. and learned Friend clarify what proportion of those coming for interview have subsequently been placed in jobs?

Mr. Clarke: We have no means of knowing exactly, and we never will unless we go in for a large-scale survey of everybody who has left the count. At the moment, 86,211 people have ceased to claim unemployment benefit and we trust that they are in work or in training or have been placed in some way. Unless we go out and pursue them all and have a full survey, we shall never know. It is quite wrong, as my hon. Friend says, to muddle all this up with the routine administrative work of checking on fraud and availability for work, which, obviously, we must continue with as well.

Mr. Leighton: Does the Paymaster General recall telling the House on 28 October that each person would have an hour-long interview? Does he know that staff have been asked to conduct at least 45 interviews a week, and that that, with various emergencies, means that the average person has an interview lasting only 25 minutes? If they are sent to a job and do not get it—less than 1 per cent. in most areas get a job—that is the end; there is no follow-up interview. As a result, many of the staff are becoming cynical and are wondering whether their purpose is to police the benefit system and chase people off the register.

Mr. Clarke: We are only providing an hour-long interview and have greatly increased the number of staff available to do that. That is the service that we are seeking to provide. We are also, in the few pilot areas, seeking to extend the service to those who have been unemployed for six months. We are offering them a range of opportunities from the many that I described a moment ago. The hon. Gentleman has no justification for his assertion that less than 1 per cent. are getting a job. It must be more than that, but without surveying them all we have no means of knowing exactly how many.

New Workers Scheme

Mr. Butterfill: asked the Paymaster General whether he will estimate the contribution likely to be made in employment in tourism by the new workers scheme.

The Parliamentary Under-Secretary of State for Employment (Mr. David Trippier): This information is not available. However, by the end of March 1987 some 13,000 young people will be supported in the wider industrial grouping including hotels and catering, a significant proportion of which will be in tourism-related jobs.

Mr. Butterfill: I am most grateful to my hon. Friend for that information. Does he agree that tourism is a particularly appropriate industry for the new workers scheme, first, because it assists the industry in contributing as much as it does towards our balance of payments and, secondly, although traditionally wages for young people in the industry have been low, they lead to outstanding employment opportunities, as is evidenced in my constituency?

Mr. Trippier: My hon. Friend is absolutely right. Career prospects in tourism are better now than ever

before. Given the dramatic growth in that sector during the past few years, the opportunities for young people are enormous.

Mr. Willie W. Hamilton: Is the Minister aware that, as a result of the Government's legislation on wages councils, the wages of young workers in our hotels and elsewhere have been, or are about to be, cut by about £20 a week —[HON. MEMBERS: "Rubbish."] That is indeed the case. Will the Minister make inquiries and ensure that those young people are not exploited in such an obscene way by the industry?

Mr. Trippier: What the hon. Gentleman says is pure hypothesis, and not fact. I should like to see details on those points. We took young people out of the purview of the wages councils in order to give them a better opportunity to get their feet on the first rung of the employment ladder. I am sure that that is what is happening right now.

Mr. Steen: I recognise the importance of the new workers scheme, but is my hon. Friend aware that last summer thousands of jobs were going begging in my constituency in south Devon because young people and those on the unemployment register just would not take them? Many of those jobs were taken by people from European countries, although they should have been filled by our young people. Will my hon. Friend do something about that by next summer?

Mr. Trippier: One of the difficulties for the tourism sector is that young people may from time to time get a little mixed up about the difference between service and servility. The Opposition do not help matters by rubbishing jobs in the tourist industry that are occupied by those young people.

Mr. Prescott: I had a job in tourism, and I do not need the Minister's lecture.

Mr. Trippier: That is why I am so surprised that the hon. Gentleman should take every opportunity to rubbish jobs in tourism. We are trying to correct that impression, and I have recently launched a video to that end which will be seen in 7,500 schools.

Work Test

Mr. Prescott: asked the Paymaster General by what amount he expects the unemployment figures to fall as a result of the new availability for work test.

Mr. Kenneth Clarke: The purpose of the new procedure for testing availability for work is to determine entitlement to benefit in line with long-standing law and following the recommendations of the Public Accounts Committee. It is not possible to forecast what the results of the new procedure will be, but it involves no change in the conditions governing eligibility for benefit.

Mr. Prescott: Did not the pilot study on those schemes show that 20 times more people were being referred for suspension of benefit than happened before those interviews? Can the Minister confirm press reports about the Devon pilot scheme, to the effect that the adjudicator reviewing those suspensions reversed more than 70 per cent. of them? It confirms our view that the Department's obsessive zeal intimidates people into leaving the unemployment register. What steps will the Paymaster


General take to improve the situation, so that unemployed people, who have been found innocent of the charges laid against them, are not intimidated and made to feel like scroungers?

Mr. Clarke: In the pilot areas between 3 and 4 per cent. of claimants did not pursue, or withdrew, their claims when they were asked to complete a questionnaire. Between 2 and 3 per cent. who continued with their claims were disallowed by the adjudicating authorities. However, the hon. Gentleman has touched on an extremely important safeguard: the final decision is taken by an independent adjudication officer, and there is a court of appeal. The only people who will lose their benefit as a result of that process are those who were never entitled to it according to the law and the rules laid down by the House.

Mr. Ralph Howell: Does my right hon. and learned Friend accept that we shall never solve this problem until we offer work at work centres, as was designed by Beveridge in his original proposals? Will he give serious consideration to the introduction of a universal workfare scheme?

Mr. Clarke: As I have said, we are offering work, training and so on to nine out of 10 of the long-term unemployed who come in and are interviewed. In addition, we are providing 250,000 places under the community programme. We are making great progress, and it is helping to produce the present reduction in the level of unemployment. I am not satisfied that we need to go on from that to some compulsory workfare scheme, although I continue to listen with interest to my hon. Friend's arguments.

Mr. Hugh Brown: The Minister referred earlier to the relationship between staff morale and the implementation of policy. Does he think that the introduction of the new availability test has helped staff morale? Can he say how many offices have suffered some sort of disruption because of its introduction?

Mr. Clarke: The pilot schemes were introduced with no trouble with staff or anyone else. We received no complaints from any of the hon. Members whom we told about the pilot schemes. We received no complaints from individuals until one of the trade unions involved, or a branch of it, in concert with the hon. Member for Dunfermline, East (Mr. Brown), tried to allege that with the introduction of the schemes we were suddenly pressurising the unemployed. I assume that when this nonsense has died down the morale of our officers will be restored and that they will carry on implementing Parliament's wish that we pay the benefit to all those who are justly entitled and stop paying it to those who are not available for work.

Sir William Clark: As the question suggests that a reduction in unemployment is wanted, will my right hon. and learned Friend say whether, if a 1 per cent. levy on turnover were placed on employers, that would increase unemployment, or decrease it?

Mr. Clarke: It is astonishing that an Opposition Front Bench spokesman can casually throw out at a by-election meeting a proposal that would mean a huge increase in employment costs. All the increases in employer's costs that the Opposition keep advocating will cost jobs, as will the minimum wage and a number of their other

propositions. I understand that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersely) is engaged in conversations with his hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott). Perhaps we shall know whether £6 billion or some such sum would be imposed on British industry by the Opposition.

MSC (Adult Training)

Mr. Bruce: asked the Paymaster General how much the Manpower Services Commission has spent on adult training during the current fiscal year: and how many adults have benefited from training funded by these grants.

Mr. Trippier: At the end of September 1986 the Manpower Services Commission had spent some £90 million on adult training programmes and helped about 153,000 adults.

Mr. Bruce: Will the Minister comment on the cut in training at offshore training centres because of the current difficulties? Will he acknowledge that although the oil price is depressed now, there is a long-term secure future for the industry, and that training should be maintained in spite of the current short-term difficulties.

Mr. Trippier: I shall be happy to meet the hon. Gentleman and representatives from the industry if they would care to see me in the Department. The details of why the MSC has withdrawn a part of the training are extremely complex. If the hon. Gentleman would like to take up my offer, I would be delighted to honour it.

Mr. Rowe: Does my hon. Friend agree that one of the slight shadows over the improving economy that we now enjoy is the growth of skill shortages? Does he accept that it is among adults, who are presently debarred in many instances from receiving assistance towards adult training because they have been trained already in another skill, that we should be working the hardest? Will he give an assurance that in the provision of adult training the emerging skill shortages will be given paramount importance?

Mr. Trippier: I would dispute that there is a growth in the number of skill shortages. One of the reasons why we have spent so much money through the MSC on local training grants for employers is to meet the shortfall in skills training, together with the development and strengthening of skills training centres. In addition, there is the new initiative that we are taking from 1 April next year in the form of a national priorities skills scheme, which I hope will meet some of the concerns expressed by my hon. Friend.

Mr. Sheerman: In view of the complacency of the Minister in response to this question on adult training, is it not about time that he had serious words with Geoffrey Holland, the director of the MSC? In a speech to the Institute of Personnel Management last week Geoffrey Holland talked about the need for a revolution in adult training and the inability to meet adult training needs in Britain. Are we talking about the same world as Geoffrey Holland? I remind the Minister that Geoffrey Holland is the senior civil servant in the MSC, who talked originally about shooting for 1 per cent. if we were to get on course in competing with our major industrial competitors in adult training. Is it not a fact that adult training has not


even been started by the Government, and all that we have seen are schemes to get people off the dole and off the figures?

Mr. Trippier: The hon. Gentleman is misquoting Mr. Geoffrey Holland, and not only about the 1 per cent. Mr. Holland has never suggested that the 1 per cent. which the hon. Member for Kingston upon Hull, East (Mr. Prescott) mentioned should be levied on all firms. As my hon. Friend the Member for Croydon, South (Sir W. Clark) said, it would be an increasing burden on business, tantamount to about a 20 to 25 per cent. increase in the rate of corporation tax. The hon. Gentleman suggested that industry should look on training as an investment and not as a cost, and on that there is no difference of opinion between him and me.

Job Release Scheme

Mr. Harvey: asked the Paymaster General what would be the current cost of reducing the age of qualifications of the job release scheme to 60 years; and how many jobs would be saved thereby.

Mr. Lee: A reduction from 64 to 60 in the qualifying age for the job release scheme would in the first year create some 50,000 opportunities for replacement workers. This would cost about £132 million in the first year and a further £196 million in subsequent years.

Mr. Harvey: In view of the cost effectiveness of reducing unemployment in this way and the great number of people seeking early retirement, will my hon. Friend therefore consider introducing this measure?

Mr. Lee: The scheme is effective but it is also costly and although it is under constant review we have no present plans to change it.

Mr. Janner: The Government are continuing relentlessly to fiddle the unemployment figures. Would it not be better to give men and women the right to retire voluntarily at 60? That would give to people who want it a dignified retirement and their jobs would become available for younger people who are desperate for work.

Mr. Lee: I have nothing to add to my answer.

Mr. Evans: In view of the popularity of this scheme with employers and employees, why do the Government not adopt a step-by-step approach by reducing the retirement age one year at a time? They could start by reducing it to at least the qualifying age of 63, which is what it was when the Government took office.

Mr. Lee: That is always a possibility and an option. There have been seven changes in the age conditions since 1977. At present about 30,000 people are supported under the scheme, at a total cost of £111 million. It is an expensive scheme.

Labour Statistics

Mr. Evans: asked the Paymaster General how many people are currently employed in manufacturing industries; and how many were employed in manufacturing in June 1979.

Mr. Lee: In September 1986 there were 5,554,000 employees in employment and self-employed people in manufacturing industries in Great Britain. In June 1979 there were 7,267,000.

Mr. Evans: Will the Minister acknowledge that as a result of the Government's policies nearly 2 million jobs in manufacturing industry have been lost since 1979? That is an absolute disgrace. Is it not time that the Government recognised that manufacturing industry is the lifeblood of Britain and started doing something about improving that sector instead of spending so much time fiddling the unemployment figures?

Mr. Lee: The hon. Gentleman knows the situation full well. Employment in manufacturing industry has been falling for the last 20 years. We have about 23 per cent. of our working population in manufacturing, while in the United States it is only 19 per cent. May I refer the hon. Gentleman to the comments of his leader, which appeared in The Guardian on 1 November. The headline says: "Kinnock cools hopes for jobs in manufacturing." The article by John Carvel reports what the Leader of the Opposition told Welsh industrialists.
He said:
the Labour party does not expect its plans to revive manufacturing industry to produce any substantial increase in manufacturing jobs.

Mr. Roger King: Does my hon. Friend agree with the trade union movement that one way of establishing how successful British industry is to look not at the number of people employed in it, but at the number of robots used?

Mr. Lee: My hon. Friend is right. One of the reasons for the reduction in manufacturing employment is clearly the increasing use of robotics and automation, and more especially the increase in efficiency that has been achieved during the lifetime of this Government.

Mr. O'Brien: Does the Minister accept that a large part of the increase in the loss of jobs in manufacturing industry has been among people in my constituency and in the travel-to-work area which covers the Hemsworth and Wakefield constituencies? Unemployment is now bordering on 16 per cent. Will the Minister press for assisted area status for the travel-to-work area that covers my constituency and those of my hon. Friends so that something is done to improve manufacturing industry and reduce unemployment?

Mr. Lee: I am conscious of the fact that there are depressingly high unemployment figures in a number of regions. I fully accept that. Particular area status is a matter not for the Department of Employment but for the Department of Trade and Industry and the Department of the Environment. I draw the hon. Gentleman's attention to the success of British Coal Enterprise. Recently its funds have been doubled to about £40 million, which has been beneficial in part in helping to create new jobs in areas such as the hon. Gentleman's.

Restart Scheme

Mr. Lawler: asked the Paymaster General what figure he has for the destination of people who have been on a restart scheme.

Mr. Kenneth Clarke: We have no means of knowing how many of those who have had a restart interview, or have been on a restart course, subsequently find work, or go into training, self-employment or other opportunities.

Mr. Lawler: My right hon. and learned Friend will be pleased to know of the success of the scheme in Bradford,


where more than 4,000 people have been interviewed, of whom 94 per cent. have been made a positive offer. As anyone who has ever visited one of these schemes will be aware, the greatest success must be in remotivating people who otherwise would become demoralised. Will my right hon. and learned Friend assure those who are working in the restart scheme that, given its success, the Government intend to extend it universally to those who have been unemployed for more than six months?

Mr. Clarke: I agree with my hon. Friend. We are approaching and interviewing that body of people who have given up hope of getting work. Many of them believe that there is no chance of getting a job. They discover that we can offer them a range of opportunities. I am glad that the scheme is helping in Bradford. We are already piloting the possibility of extending the scheme to those who have been out of work for six months. If that is successful, we shall obviously look at the opportunities to extend it.

Mr. Ernie Ross: The Paymaster General will know that Dundee is one of the areas selected for the MSC's new job training scheme. The experience of the 20 individuals who were interviewed last week is frightening and horrifying. Neither oral nor written information was available to the claimants who were interviewed, who were obviously anxious and keen to improve their employment prospects and to know whether they would be entitled to the benefits that they had previously received. The also wanted to know their position at the end of the six-month period. In fact, the whole scheme is a shambles. The people who have accepted those training places, perhaps because they are afraid of losing benefit, are anxious about their present eligibility for benefit, and their long-term future.

Mr. Clarke: I am surprised to hear of that reaction. Obviously, we are just introducing and trying out this new scheme with the aim of giving a guaranteed training place to everyone under 25 who has been unemployed for longer than a certain time. I am sure that those people could benefit from the type of training courses which we have been putting together. The number of unemployed people under 25 is dropping steadily all the time. We think that giving more training is the key to getting even more of them back into work.

Mr. Sackville: Does my right hon. and learned Friend agree that if Labour Members want to show real concern for the unemployed they should start encouraging the scheme instead of worrying about the electoral consequences for their party of any fall in unemployment?

Mr. Clarke: I entirely agree. The Opposition are looking increasingly concerned. Some of them almost argue that if we do anything that actually gives someone a job that is a dastardly move to reduce the unemployment figures and weaken their chances of winning the election. I hope that they will stop calling our schemes tea and sympathy, because up and down the country the schemes are proving to be an extremely effective means of getting the long-term unemployed back into work.

Labour Statistics

Mr. Tinn: asked the Paymaster General what the estimated effect has been on the unemployment figures as a result of the changes made in the method of counting since 1979.

Mr. Kenneth Clarke: We have made only three changes in the method of counting, and two of those were to correct errors. It is impossible to estimate what the unemployment count would be today if these changes were reversed.

Mr. Tinn: Does the right hon. and learned Gentleman realise that, on our reckoning, the number of changes is nearer 18? The effect of the changes is to reduce the numbers appearing on the register by nearly 500,000. Can the right hon. and learned Gentleman give corrected figures? Which changes, even those to which the right hon. and learned Gentleman can admit, have resulted in an increase, and which have resulted in a decrease, in the numbers on the register?

Mr. Clarke: The hon. Gentleman is drawing from a highly publicised survey of all the administrative changes which, it is said, have been made in the implementation of the benefits system. The list, which gets up to 18, includes things such as a strike, which is hardly within the Government's control. In a system as complex as the national insurance system, it is obvious that one is always making changes, but it is impossible to work out what the upward and downward effects of most would be. The vast majority have no effect.
The hon. Gentleman asked about changes made in the method of counting. There have been only three. Two of them corrected errors, one a Northern Irish mistake and another in this country, and the third, the only one to make any major change to the figures, was when we went over to registration at jobcentres in October 1982. That enabled us to computerise the count and gave us a more accurate and up-to-date record, which reduced the count by about 78,000. All the other estimates about what would be the effect of suddenly going back to the 1979 administrative change and bringing back errors and old rules are completely bogus. The people who put those claims forward have no way of knowing, for example, how many people would register at jobcentres in the unlikely event of our going back to that system.

Mr. Holt: My right hon. and learned Friend might like to note that, whatever method of calculation was in operation, in the district shared by the hon. Member for Redcar (Mr. Tinn) and myself the number of young people unemployed could be reduced by 25, according to the Labour chairman of the employment committee on Langbaurgh, if it was not vetoed from doing so by the local trade union.

Mr. Clarke: I am grateful to my hon. Friend. We have difficulties of that kind placed in the way of the youth training scheme by the last recalcitrant trade unions which take that view. We also have some school leavers still on the register. All those who leave school at the age of 16 are guaranteed a place on the youth training scheme. Therefore, they are unemployed only if they have chosen to be. Unfortunately, they are sometimes encouraged in that way by some of the remarks of Front Bench Opposition spokesmen.

Mr. Prescott: Does the Paymaster General not accept the Library's calculation of the real levels of unemployment? It says that the real level is equivalent to 4·4 million. Does the Paymaster General not accept the statement of the research department, which calculates six changes to the figures? Two of those changes increase the unemployed


by 43,000 but the remaining changes reduce unemployment by nearly 400,000. Everybody accepts that the figures are reduced by nearly 500,000 on whatever assessment is used.

Mr. Clarke: I have not heard the hon. Gentleman use the 4 million figure for some time, because he knows that it is arrived at by adding on all the people in training, all those on the community programme and adding on people who were not counted when the Labour Government were in office and who ought not to be counted becaue they are not unemployed. The six changes are administrative changes which have had some effect on the figure. I repeat that there is no way of calculating what the effect would be if we had that system today. It would be ridiculous suddenly to go to our officers and tell them to reverse every administrative change made in the national insurance system over the past six years and go back to every error that was made. What is worrying the Opposition is the fact that the number of people now workng in this country has increased by over 1 million since the last election. It has gone up by over 200,000 in the last full year alone. The figures are getting better, as the hon. Gentleman knows. That is why he is doing his best to knock them down.

Tourism

Mr. Coombs: asked the Paymaster General when he next expects to meet the chairman of the English Tourist Board to discuss prospects for tourism in England.

Mr. Trippier: I will be meeting Duncan Bluck, the chairman of the British Tourist Authority and the English Tourist Board on 10 December to discuss, among other issues, the prospects for tourism in England.

Mr. Coombs: Will my hon. Friend raise with the chairman of the English Tourist Board the idea of a major new initiative in 1987 to encourage tourists to visit the English regions rather than staying in London? Does he agree that that would benefit the hard-pressed people of London as well as boosting employment prospects in other parts of England such as Wiltshire?

Mr. Trippier: I certainly agree with the latter point made by my hon. Friend. I am anxious to come up with new initiatives in 1987. I must say that we have just launched a couple of new initiatives with the ETB where it has mounted a campaign with the four northern regional tourist boards to promote the north country rather than London and the south-east. In addition, there is a new off-season promotion featuring the west country and the heart of England. All that is very much in line with the new policy in the Department to encourage the dispersal of visitors to the regions.

Mr. Wrigglesworth: Is the Minister aware that Stockton council is doing its best to promote tourism in the Teesside area, which, as the Minister will know, has the highest level of unemployment in Great Britain? Will he look sympathetically at proposals that the council have put forward for the development of the Preston park estate and museum which has the Stockton-Darlington railway running through it, which could become a major tourist area, creating jobs and income for the region?

Mr. Trippier: I am anxious to look as sympathetically as possible on the project that is being put to the ETB at the moment. Certainly it falls within the guidelines of the

new tourism policy, in that we should be supporting major tourist attractions so that they can act as a honeypot to attract more wealth to those areas and increase jobs in tourism. I shall certainly look at the matter sympathetically.

Mr. Gale: Further to the answer that my hon. Friend gave to my hon. Friend the Member for South Hams (Mr. Steen), when he meets the chairman of the ETB, will he discuss ways of promoting further career prospects in tourism in schools, so that young people are made further aware of the excellent prospects in that industry?

Mr. Trippier: That is the most important point that could be made on this subject. That is the reason why last Friday I launched the video that is going to 7,500 secondary schools. We hope that it will be viewed by upwards of 1·6 million schoolchildren. Again, it is an attempt to attract them to tourism as a serious career.

Mr. Loyden: Does the Minister accept that it is a fallacy to imagine that tourism can resolve the problem of unemployment to any extent, taking into account present unemployment in areas such as Merseyside? Is he aware that unemployment is rooted in the Government's economic policies? When they change, and when we get manufacturing industry back into operation, real, proper jobs will be available, but not until then.

Mr. Trippier: I must say that the hon. Gentleman seems to be out of step with some of his colleagues in his own party in the Merseyside area, which will not come as a great shock to the rest of the House. I happened to be in Merseyside only yesterday. Several people there appreciate the development of tourism in the Merseyside area, particularly as a result of the development of the docks, the garden centre and the tall ships race, of which they are extremely proud. That has created more wealth in that area and more jobs.

Mr. Maclean: When my hon. Friend meets the chairman of the ETB, will he stress the special problems faced by Cumbria, which is very keen to encourage tourists to the region, but has suffered enormously in the past couple of years through other problems caused by other industries outwith the control of the tourist operators?

Mr. Trippier: I understand exactly the point that my hon. Friend is making. As a result of representations that he has made to me, and which I in turn have made to the ETB on his behalf, we have now managed to secure increased funding from the ETB for my hon. Friend's constituency and the surrounding area.

Labour Statistics

Mr. Simon Hughes: asked the Paymaster General if he will list (a) the latest monthly figure for people registered as unemployed in the Greater London area, both as a total and as a percentage of the total number of people available for work and (b) comparable figures for the same month in 1981, 1976, 1971 and 1966.

Mr. Lee: As the reply contains a statistical table I shall, with permission, arrange for it to be printed in the Official Report. Figures will be given showing the numbers of unemployed claimants and the unemployment percentage rate in the Greater London Area for October of 1976, 1981 and 1986.

Mr. Hughes: I am grateful for the Minister's answer. Does he accept that the Greater London figures conceal a problem of a massive increase in unemployment in inner London, where the figures show that there are now over one quarter of a million out of work, which is the largest in any municipal area in the United Kingdom? Will the hon. Gentleman tell the House what initiatives will be developed other than the inner city action team and the docklands corporation to produce jobs in inner London for people resident in inner London in the foreseeable future? There is a crisis. What will the Minister do?

Mr. Lee: While, sadly, unemployment has risen, I have to say to the hon. Gentleman that the Greater London rate is still below the national average. With regard to Government spending, about £210 million is going into Greater London in the current financial year from a mix of Government Departments. As the hon. Gentleman knows, Southwark is about to be upgraded to a programme authority area. In fact, there are 800 job vacancies in Southwark alone at present.

Mr. Wilkinson: May I tell my hon. Friend that in west London it is hard to get skilled workers? For example, it is a real problem to fill vacancies at London airport, which have to be filled by foreigners. Would not at least a partial solution to that problem be a greater willingness on the part of unemployed people in central London to commute out against the tide to secure the employment available for them in the outer boroughs?

Mr. Lee: Obviously, such commuting would make sense. Clearly, however, there are skill shortages, and it is a matter of matching those vacancies with the people available.

Following is the table.
Estimates of the numbers of unemployed claimants at regional level are available only from April 1974. Figures for 1976 to 1981 are estimates. The comparison is affected by the provisions of the 1983 Budget provisions, which meant that certain older men no longer need to sign on at unemployment benefit offices to claim national insurance credits or the longterm rate of supplementary benefit.

Unemployed Claimants in the Greater London Area



Number
Unemployment percentage of employees and unemployed


October 1976
151,700
3·9


October 1981
299,600
7·3


October 1986
403,600
10·4

Community Programme

Mr. Thurnham: asked the Paymaster General how many of those taking up employment from the community programme are currently in the same employment after 12 months; and if he will make a statement.

Mr. Lee: The information requested is not available. However, the results of the lastest follow-up survey of former community programme participants shows that about 30 per cent. of former participants responding obtained a job or training immediately on leaving, and 37 per cent. were in employment or training 10 months after leaving the community programme. Fifty four per cent. had had at least one job during the 10-month period.

Mr. Thurnham: In view of my hon. Friend's encouraging reply and his recent most welcome visit to

Bolton to see the success of the pilot job guarantee schemes, will he extend these schemes nationally and give priority on the community programme to those who have been out of work longest?

Mr. Lee: I know how much thought and effort my hon. Friend gives to this whole area of long-term unemployment in his constituency—something that I was able to observe on my recent visit to Bolton. The advantages of participation in the community programme are available to all those who are eligible, including the long-term unemployed. Indeed, 30 per cent. of those on the community programme had previously been unemployed for more than 18 months. However, the community programme is only one of the many restart options, and others may be more relevant to the long-term unemployed.

Ms. Clare Short: Does the Minister agree that when people have to wait a year or 18 months for a job, then for 12 months receive about £45 a week for a low-level job, and then 70 per cent. of them are returned to unemployment, that is not a success but a failure? The people want real, decently paid permanent jobs, not this kind of manipulation of the long-term unemployment figures.

Mr. Lee: That is why the Government have created 1 million new jobs since 1983.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Lofthouse: asked the Prime Minister if she will list her official engagements for Tuesday 18 November.

The Prime Minister (Mrs. Margaret Thatcher): This morning I attended the memorial service for Henry Moore and had meetings with ministerial colleagues and others. In addition to my duties in this House I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty The Queen.

Mr. Lofthouse: If Mr. Peter Wright's memoirs confirm that Sir Roger Hollis was a spy, does the Prime Minister agree that her statement to the House in March 1981 was misleading? Or was it as Sir Robert Armstrong described yesterday and the right hon. Lady was just being economical with the truth?

The Prime Minister: I stand by, and reaffirm, the statement that I made to the House on that subject. With regard to the case, the matter is sub judice.

Mr. Tim Smith: Is my right hon. Friend aware that 105 David Owens and an encouragingly large number of David Steels have expressed an interest in the British Gas share issue? Does not that fact, together with the fact that 6 million people in all have expressed interest, show the popularity of the Government's programme to encourage wider share ownership?

The Prime Minister: Yes. It is not only popular, it is the right policy, and we shall pursue it and other measures of privatisation.

Mr. Kinnock: Against the background of the teachers' settlement negotiated last week, the National Confederation of Parent-Teacher Associations has this morning made a strong appeal to the Prime Minister and the Government to "accept and ratify" the proposed


agreement. May I therefore strongly urge the Prime Minister to announce now that the Government will "accept and ratify" that agreement to ensure a sustainable settlement that will work to the advantage of Britain's schoolchildren and the satisfaction of both parents and teachers?

The Prime Minister: I understand that there is not yet a full signed agreement and that there is to be a further meeting tomorrow. My right hon. Friend the Secretary of State made quite clear the conditions under which the Government would pay the extra sums to finance the proposed 16·4 per cent. increase.

Mr. Kinnock: The Prime Minister knows perfectly well that matters to be discussed tomorrow are issues of minor detail that do not affect the substance of the overall agreement. Will she tell us whether she will "accept and ratify" that agreement? Is it not obvious that, by her evasion of the majority view of parents and teachers, she is trying to pick a fight for political reasons best known to herself?

The Prime Minister: My right hon. Friend the Secretary of State has made clear the conditions upon which the Government will pay the extra sum required to finance the 16.4 per cent. increase. Those conditions relate to duties and pay structure. Pay structure is crucial if we are to get top calibre teachers into the profession. [Interruption.] If the right hon. Gentleman is interested in my reply he might do me the courtesy of listening to it. Pay structure is critical for young people coming into teaching. They must know that there are good prospects of increases in pay and excellent prospects for head teachers. The proposal on offer from the Government would take average teachers' pay 10 per cent. in real terms above Houghton and 27 per cent. in real terms above what it was when Labour lost office in 1979.

Mr. Kinnock: The Prime Minister cannot get away with that. As a former Secretary of State, does she not appreciate that to obtain teachers of high quality she must first attract them to the profession and then keep them there, which is why a decent basic rate and further prospects are included in the agreement?

The Prime Minister: Structure is vital to attract young people of calibre into the profession. The right hon. Gentleman is hardly in a position to complain when our average offer is 27 per cent. in real terms above anything that the Labour Government managed to — [Interruption.]

Sir John Biggs-Davison: asked the Prime Minister if she will list her official engagements for Tuesday 18 November.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Sir John Biggs-Davison: Will my right hon. Friend consider with her Cabinet colleagues today the publication of a White Paper about the totalitarian tendency's perversion of local government? Does she recall the words of the Labour deputy leader of the unlamented GLC about Left-wing councillors' prejudice against the police and the abuse of local government as a political ladder for the extreme Left?

The Prime Minister: I am grateful to my hon. Friend. The details that he catalogues show how the present Labour party would behave in power. That is what it is like and what it would be like.

Mr. Roy Jenkins: Does the Prime Minister now appreciate the increasing ludicrousness of the Government's posture before the Australian courts — which I am sure is not sub judice according to the rules of this House? As the Home Secretary who received the Trend report and believes in the strong probability of Sir Roger Hollis' innocence, and as an admirer of Sir Robert Armstrong, who served me in two capacities, I deplore the foolish mission on which the Government have sent Sir Robert. May I ask the Prime Minister whether there is any chance of her recovering a sense of proportion on this issue?

The Prime Minister: With regard to the main object of the right hon. Gentleman's question, like all present and former members of the security service, Mr. Wright has a lifelong duty of confidentiality to the Crown. Unauthorised publication of his manuscript would violate that obligation. My right hon. and learned Friend the Attorney-General has accordingly applied to the Supreme Court of New South Wales for an injunction to prevent publication of the book. The right hon. Gentleman will be aware that proceedings have begun in the Supreme Court of New South Wales and the matter is therefore sub judice.

Mr. Batiste: Will my right hon. Friend ensure that any settlement with the teachers includes provision to attract into the profession teachers of physics, mathematics and other subjects at present in all too short supply?

The Prime Minister: That is the object of my right hon. Friend's pay structure — to ensure that teachers of subjects in which there are shortages have a pay structure that will attract them into the profession and take them up the ladder right to the top jobs.

Westland plc.

Mr. Dalyell: asked the Prime Minister when she first became aware that the Solicitor-General had agreed to write to the then Secretary of State for Defence alleging material inaccuracies in his letter to the European Consortium.

The Prime Minister: I refer the hon. Gentleman to the written answer that I gave him yesterday.

Mr. Dalyell: In that case, why did the Attorney-General go to the lengths of threatening the Cabinet Secretary with action by the Director of Public Prosecutions and the police because the Prime Minister did not agree to the setting up of a leak inquiry and authorising it?

The Prime Minister: I have nothing to add to the many answers that I have given in statements and debates from the Dispatch Box.

Mr. Baldry: When the next general election eventually comes, will my right hon. Friend—

Mr. Speaker: Order. This is a definitive question.

Mr. Wilkinson: Does my right hon. Friend agree that the general public are more interested in the future of the European helicopter industry and those who work for it in Britain, especially at Westlands, than in who might have written what to whom and when?

The Prime Minister: The future of the European helicopter industry is extremely important, as is the future of Westland, but I have nothing to add in regard to the point which was the subject of the previous question.

Mr. Bell: In relation to the answer that the Prime Minister has given my hon. Friend the Member for Linlithgow (Mr. Dalyell), is she aware of the phrase of Aneurin Bevan—that he who fights and runs away lives to run away another day?

The Prime Minister: What the hon. Gentleman does not like is the fact that he has had the answers.

Mr. Butterfill: Does my right hon. Friend agree that, much as we seek to support President Alfonsin and the newly emergent democratic Government—

Mr. Speaker: Order. That does not relate to this question, which is not an open question.

Mr. Leadbitter: Will the right hon. Lady bear in mind that the submissions that the Cabinet Secretary, Sir Robert Armstrong, is making in Australia this week—

Mr. Speaker: Order. That does not relate to this question either. I think that we should move on.

Engagements

Mr. Hickmet: asked the Prime Minister if she will list her official engagements for Tuesday 18 November.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Hickmet: Will my right hon. Friend congratulate the British Steel Corporation on its excellent half-year results, which show a £68 million profit? Have we not transformed BSC into one of the most efficient and successful producers in Europe which is able to compete in world markets? Would it not be a disaster if we were to pursue the Labour party's policies and use the nationalised industries to employ more men? Do not the figures justify the chairman's view that BSC should be returned to the commercial sector and steelworkers and former steelworkers given the right to buy shares in it?

The Prime Minister: I join my hon. Friend in congratulating those who work in steel on their profit record. When we came to office the taxpayer was having to pay hundreds of millions of pounds a year by way of subsidy; now, the British Steel Corporation is in profit and therefore contributing to the Exchequer. I agree that the Labour party's policy of compulsory overmanning in nationalised industries is utterly ridiculous. I also agree that we must consider whether in future we should privatise the steel industry.

Mr. Foot: Reverting to the right hon. Lady's replies about Sir Roger Hollis, does she recall making a statement to the House on this matter in which the charges against Sir Roger were repudiated? That was accepted by the Government and, I think, the House at the time. If the Government have altered their opinion in any way, is it not the right hon. Lady's duty to come to the House and explain the facts? Is it not shameful that Sir Roger's reputation and his family should be treated in this way by the Government, who should be carrying out what the Prime Minister said to the House?

The Prime Minister: The right hon. Gentleman cannot have heard what I said earlier. I stand by my earlier statement about Sir Roger Hollis.

Mr. Robert Atkins: asked the Prime Minister if she will list her official engagements for Tuesday 18 November.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Atkins: Will my right hon. Friend take this opportunity to congratulate the work force at Leyland Vehicles on achieving the largest share of the United Kingdom truck market by making the best products at the right price with the right support and of the right design? Does she agree that if Leyland Trucks is to succeed in a market in which too many trucks are being sold worldwide, it and many other British companies will need a flexible and competitive financial package to help export deals, preferably to match those competitors, if not to better them?

The Prime Minister: As my hon. Friend is aware, those who work in that industry have enjoyed enormous help from the taxpayer. I hope that they will make more products at the right price and will continue to get more sales, which will be very welcome. As my hon. Friend is aware, there is a considerable overhang of debt which the ECGD must tackle, and we must also bear that in mind.

Mr. Ron Lewis: Now that the Prime Minister has re-engaged a member of the Billy Graham evangelistic team to her staff, can she say whether the teachings of Billy Graham are being adhered to—in other words, "never tell a lie and never bear a grudge against those who disagree with you"? Assuming that is accepted, can the right hon. Lady say how much longer her hon. Friends the Members for Aldershot (Mr. Critchley) and for Tiverton (Mr. Maxwell-Hyslop) must serve before they get their knighthoods?

The Prime Minister: I congratulate the hon. Gentleman on the ingenuity of his question, the full impact of which is not lost on me.

Mr. Speaker: Statement. I call the Prime Minister.

Mr. Williams: On a point of order, Mr. Speaker.

Mr. Speaker: Does it arise out of questions?

Mr. Williams: Yes, Mr. Speaker. You will understand that we appreciate that the Prime Minister would not want to answer questions about the debacle that is being unveiled in the Australian courts. However, not once but twice this afternoon the right hon. Lady made a categorical statement that the proceedings in Australia are sub judice. If that suggestion is allowed to stand, it will, of course, create a block on further questions and discussions. Will you give a clear ruling that this afternoon the Prime Minister has not once but twice misled the House in stating that a case before an Australian court is sub judice in this House?

Mr. Speaker: As I understand it, this case, which is taking place in an Australian court, is not sub judice under our rules. We now come to the statement by the Prime Minister.

The Prime Minister: With permission, Mr. Speaker, I should like to make a statement on my visit to the United States—[Interruption.]—

Mr. Speaker: Order. The Prime Minister is about to make a statement.

Mr. Kinnock: On a point of order. Mr. Speaker. It is clear that inadvertently—and I am certain that was the case—the Prime Minister referred to the matter being heard in Australia as sub judice as it affects the proceedings of this House. The acknowledgement has been made that that is not the case. However, the Prime Minister's answers to questions influenced the direction of questions. I think that the Prime Minister would now want to avail herself of an early opportunity to say that the matter is not sub judice in this House so that the subject need not be raised in the same form again, thereby allowing questions to be raised.

The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): rose— [Interruption.]

Mr. Speaker: Order. I have called the Leader of the House.

Mr. Biffen: Further to that point of order, Mr. Speaker. In making your judgment on this matter would you kindly take account of the fact that the United Kingdom Government are a party to the case in Australia and indicate how that relates to the sub judice rule?

Mr. Speaker: I prepare myself very carefully for Question Time every day and for every eventuality, and I took that matter into account today.

Mr. Williams: Further to that point of order, Mr. Speaker. I am grateful to you for a very helpful and clear ruling. Will you now indicate whether, in your experience, it is not the case, when an hon. Member has found that he or she has misled the House—even if inadvertently—that Member would normally make an apology to the House?

The Prime Minister: Further to that point of order, Mr. Speaker. I made it clear in my answer that the Attorney-General has accordingly applied in the Supreme Court of New South Wales for an injunction to prevent the publication of the Wright book. You have ruled that the matter is not sub judice in this House, but I must submit that it would be most unwise— [Interruption.]

Mr. Speaker: Order. This is an extremely important matter. [HON. MEMBERS: "Hear, hear".]

The Prime Minister: It would be most unwise, indeed, rash of me as Prime Minister of the United Kingdom to comment on a case to which the Attorney-General is party in Australia. I would have thought that most people would understand that. If not, perhaps they would understand the comments of a previous Labour Prime Minister who said:
I shall adhere to the normal practice of not commenting on security matters." — [Official Report, 29 June 1978, Vol. 952, c. 631.]

Mr. Kinnock: Further to that point of order, Mr. Speaker. It is easily seen that the Prime Minister's response does not satisfy the House. That places you in an invidious position, especially since your judgment was so unequivocal and clear. May I suggest that a period of further reflection is given to the matter because the alternative is obviously the continued distraction of the House on the matter when we have other serious business to transact? It will be necessary to give further attention to this, taking account of the matter of national security

raised by the Prime Minister, in order to discover whether that is the valid question under consideration or whether it is a more politically partisan question.

Mr. Speaker: Order. I think that the Leader of the Opposition has made a wise judgment on this matter. The two matters are not connected, but they are relevant.

Mr. Beith: Further to that point of order, Mr. Speaker. The position remains that a challenge has been issued to the Chair. The Prime Minister gave her interpretation and her assumption that the matter was sub judice. You gave your ruling and the Leader of the House then challenged that ruling in polite terms.

Mr. Biffen: indicated dissent.

Mr. Beith: The Leader of the House effectively asked you to review your ruling. I see no reason why you should be asked to alter your ruling. Therefore, we cannot move forward until the Government make it clear that they accept your authority.

Sir John Biggs-Davison: Further to that point of order, Mr. Speaker. You have ruled that the sub judice rule does not apply and we accept that absolutely — [Interruption.] But for the future, Her Majesty's Government of the United Kingdom are party to a case in a court before one of Her Majesty's Australian judges. How do Her Majesty's Government or any party to such a case obtain justice if the sub judice rule does not apply?

Mr. Speaker: Order. We have a full day ahead of us and I hope that I can clear up the matter. I said to the House that under our rules the matter before a court in another country was not sub judice. Whether it is a matter of national security is a completlely different issue and a perfectly legitimate one to call in aid.

Mr. Andrew Faulds: rose—

Mr. Skinner: rose—

Mr. Gow: Further to that point of order, Mr. Speaker. Would it not be for the convenience of the House if you could explain how it is that a matter before one of Her Majesty's judges in Australia in a case to which Her Majesty's Government are party is not sub judice under the rules of the House?

Several Hon. Members: rose—

Mr. Speaker: Order. I shall take all the points of order together.

Mr. Faulds: On a point of order—

Mr. Speaker: I have not called the hon. Gentleman yet.

Mr. Faulds: I was on my feet first.

Mr. Speaker: Order. I decide the order in which I take these questions.

Mr. Campbell-Savours: Further to that point of order, Mr. Speaker. I put it to you that the people of Australia are having reported to them our proceedings, and questions on the Order Paper, in detail. It is most important that the position is clarified, because today in Australia there are calls for the resignation of Sir Robert Armstrong in so far as yesterday he had to admit in a court of law in Australia that he deliberately misled the court by submitting in affidavits some days ago inaccurate information. I and my hon. Friends have pressed for a


statement on this matter from both the Attorney-General and the Prime Minister, but none has been made. I again ask that a statement be forthcoming. The people of Australia—

Mr. Speaker: Order. Hon. Members cannot ask for statements through me.

Mr. Hickmet: Further to that point of order, Mr. Speaker. I speak for Glanford and Scunthorpe, not for Australia. In considering the representations made by my hon. Friend the Member for Eastbourne (Mr. Gow), will you also consider the fact that, notwithstanding that this case is in front of one of Her Majesty's judges in Australia, it might finish up before the Privy Council?

Mr. Faulds: I am most grateful to you, Sir. Further to that point of order. It is clear that you made a ruling that the matters in Australia were not sub judice as far as this House is concerned. We are not asking the Prime Minister to make a statement on those matters. We are asking her to withdraw the incorrect assertion that she made that these matters were sub judice, and she should be required by you, Sir, to do that.

Mr. Skinner: Further to that point of order, Mr. Speaker. As I see it, the issue is relatively simple. In the past 10 minutes there have been a series of incidents in which you and one Member of Parliament, who happens to be the Prime Minister, have been in dispute. Normally, when a Member of Parliament challenges the authority of the Chair, he has either to withdraw or leave. Why is it that a Back-Bench Member of Parliament can be called upon to withdraw when he challenges the authority of the Chair, but the Prime Minister is allowed to get off the hook? This is a classic example of where you need to show your authority, Mr. Speaker, and if you fail to do so, do not expect any of us to have to how to the Chair.

Mr. Speaker: Order. It is very unlike the hon. Gentleman to threaten me. The Prime Minister has not challenged what I have said.

Mr. Campbell-Savours: She has.

Mr. Speaker: Order. We have a heavy day in front of us. I think that we should have some quiet reflection on this matter.

Mr. Campbell-Savours: Name her.

Mr. Speaker: Order. We can return to this matter on another day.

The Prime Minister: Further to that point of order, Mr. Speaker. I accept your ruling on sub judice as far as the House is concerned. Therefore, any questions can be

asked. I know of no rule which means that I am circumscribed in the way in which I answer questions and as you said, I can invoke security, and have done so.

Several Hon. Members: rose—

Mr. Speaker: Order. I shall take one more question. Mr. Lofthouse.

Mr. Lofthouse: Further to that point of order, Mr. Speaker. As one of the questioners whom the Prime Minister misled by her answer— [Interruption.]

Mr. Speaker: Order. This seems to he an attempt to carry on Question Time.

Mr. Lofthouse: As one of the questioners whom the Prime Minister misled— [HON. MEMBERS: "She did not mislead the hon. Gentleman."] —I should gladly accept an apology—or is the Prime Minister above this House and above you, Mr. Speaker?

Mr. Speaker: Order. The Prime Minister has made her position very clear. I shall take one further point of order.

Mr. Gow: Further to that point of order. Mr. Speaker. I wonder whether I could revert to, and add to a point of order that I put to you previously? It would be of assistance to the House if you could please explain to us why it is that proceedings in a case which is before one of Her Majesty's judges in Australia, a case to which Her Majesty's Government are a party, are not sub judice for the purposes of this House? May I make a further submission to you, Mr. Speaker?
You have said, quite rightly; that this is a very important matter. We all know the basic reason for the existence of the sub judice rule. It exists so that no influence of an improper or outside kind shall be brought to bear upon the courts. — [HON. MEMBERS: "We know that.] That is the whole purpose of the sub judice rule. Even if it is correct, as you have said, that, in accordance with past precedent, a case of this kind—

Mr. Winnick: Get to the point!

Mr. Gow: —does not fall within the sub judice rule, would you be prepared to consider whether, in this particular case, the sub judice rule ought to apply?

Mr. Speaker: Order. I carefully calculated that a question of this kind might arise today. Therefore, I was prepared with the answer that I gave. Australia is an independent country. I shall of course reflect carefully, as I always do in exchanges of this kind, upon whether the rulings that I have given are right. If I find that I was wrong, I shall gladly and certainly return to the House and make a further statement.

Prime Minister (Visit to Washington)

The Prime Minister (Mrs. Margaret Thatcher): With permisssion, Mr. Speaker, I should like to make a statement on my visit to the United States on 14 and 15 November for talks with President Reagan at Camp David. I also had separate meetings with Vice-President Bush, Secretary of State Shultz and the Defence Secretary, Mr. Weinberger.
The main purpose of my visit was to discuss with the President issues of defence and of arms control, in the light of his meeting in Reykjavik with Mr. Gobachev. We agreed upon a statement of our views, and a copy has been placed in the Library of the House.
President Reagan and I agreed that priority should be given in the arms control negotiations to an INF agreement with restraints on shorter-range systems, to a 50 per cent. reduction in strategic offensive weapons and to a ban on chemical weapons, all to be subject to effective verification. We also reaffirmed the need for effective nuclear deterrence as a cornerstone of NATO's strategy.
The President explained that the United States would proceed with its own strategic modernisation programme, including Trident. He confirmed the United States' full support for the arrangements made to modernise Britain's independent nuclear deterrent with Trident.
We also discussed the situation in the middle east. I thanked the President for what the United States had done on Syria. We agreed on the need for fresh impetus to efforts to find a peaceful solution to the Arab-Israel conflict.
On Iran, we share the aim of bringing Iran back into better relations with the West and of bringing about an end to the Iran-Iraq war, without taking sides. The President reaffirmed that the United States does not pay ransom for hostages. That is our policy, too.
We discussed the situation in southern Africa, following the tragic death of President Machel. Both our Governments remain ready to contribute to stability and an end to violence in the area.
I explained to the President the reasons for our recent decision to establish an interim fisheries management and conservation zone round the Falklands; I told him that our preference remained a multilateral solution provided that the Argentine Government were prepared to cooperate.
This was a very useful visit. The agreed statement confirmed the Government's policies, which I set out in my speech in the debate on the Address, for achieving balanced reduction in nuclear and chemical weapons, while maintaining and modernising Britain's independent nuclear deterrent. That is a policy which is good for the NATO Alliance and good for Britain.

Mr. Neil Kinnock: During the Prime Minister's talks with President Reagan at the weekend, did she express her support for President Reagan's repeatedly stated objective of abolishing all strategic nuclear ballistic missiles within 10 years, or did she not tender such support? Why does the Prime Minister think that any United States President would continue to provide an 800 per cent. increase in British strategic nuclear missiles by supplying Trident when the United States of America was getting rid of such missiles? Will the Prime Minister

explain why, if she wishes to remove disparities in the conventional balance in Europe, as we all do, she is diminishing conventional defence to buy Trident?
Did the Prime Minister associate her Government with the stated position of Chancellor Helmut Kohl that any future work on star wars must lie firmly within the narrow interpretation of the anti-ballistic missile treaty? Will the Prime Minister explain precisely what she meant when she said that star wars research should continue "up to feasibility"? Did the Prime Minister seek or receive any undertakings from President Reagan that the United States would continue to adhere to the provisions of the SALT II treaty?
On the other matters which the Prime Minister discussed with President Reagan, three weeks after rightly acting against Syria and rightly securing international cooperation because of its sponsorship of terrorism, is it not obvious that the Prime Minister severely discredits such efforts by so readily endorsing the President's trading with terrorism and his completely unconvincing explanation of his action? After Grenada, star wars, Libya and now arms for Iran, when will the Prime Minister realise that a special relationship is one thing, but sycophancy is another altogether?

The Prime Minister: As we said in our statement, priorities were set out for an intermediate nuclear forces agreement for a 50 per cent. cut over five years in United States and Soviet strategic offensive weapons and a ban on chemical weapons. We also made it clear that a nuclear deterrent is an essential part of the strategy of NATO. We made it clear that that is a very large programme and that we must tackle it. In the meantime, the modernisation of ballistic missiles must continue. Before there can be any further advance on the matters, there must be a system of effective verification. At the moment, despite the talks at Reykjavik, there has been no change in reality in the position.
With regard to diminishing conventional defence, the right hon. Gentleman must know that, if we took all the money on Trident, which is only 3 per cent. of our total defence budget, it would buy very few extra tanks, frigates or weapons and would not buy a fraction of the deterrence that the nuclear weapon buys. The right hon. Gentleman wants fundamentally to undermine Britain's defences by doing away with the independent nuclear deterrent, by discarding the American nuclear umbrella and by throwing out all American nuclear bases.
We did not discuss the provisions of the SALT II treaty on this occasion. They remain as before. They must be observed by both sides, and I hope that they will be observed by both sides. Difficulties will arise if both sides do not observe them and there are accusations against one side. That will mean that the provisions should be discussed in the relevant committee provided for in the anti-ballistic missile treaty.
With regard to Iran, may I point out—I know that the right hon. Gentleman never loses a chance to attack the President or the United States—that the President said in his broadcast, in which he set out the position:
The United States has not made concessions to those who hold our people captive in Lebanon. And we will not.
He went on to say:
The United States has not swapped boatloads or planeloads of American weapons for the return of American hostages.
He went on:


And we will not.

Sir Anthony Kershaw: Is my right hon. Friend aware of the sense of relief which will be felt by many that the United Kingdom's defence will continue to include the nuclear weapon, which is the only thing which will deter our only possible enemy, and without which we would return to the dangerous instability of the 1930s?

The Prime Minister: I agree with my hon. Friend. The nuclear deterrent has stopped both nuclear and conventional war. It has kept the peace, and that is the most important thing for the future — a peace with freedom and a peace with justice. To throw it away would be utterly futile and rash.

Dr. David Owen: Is it not an act of folly to tie a British independent nuclear deterrent to the very ballistic missile system for whose total elimination not only the United States President, but the chiefs of staff, have authorised the negotiators at Geneva to negotiate with the Soviet Union?

The Prime Minister: As the right hon. Gentleman is aware, the statement which the President agreed with me said that the United States will continue to go ahead with the modernisation of strategic nuclear weapons.

Dr. Owen: Of course they will.

The Prime Minister: That is absolutely vital. We shall continue to get Trident. [Interruption.] I know that the right hon. Gentleman thinks that cruise will be an alternative, but that is utterly wrong. We considered that when we went for Trident. The right hon. Gentleman does not like the fact that we shall modernise with Trident, that the United States will continue to modernise with Trident and that the position has not in fact changed since Reykjavik.

Mr. Cranley Onslow: May I congratulate my right hon. Friend on what her visit did to clarify the way forward on arms control and disarmament negotiations in the West? But when she hears the great know-all, the Leader of the Social Democratic party, trying to cast doubt on the readiness of the Americans to help us modernise our deterrent, does it ever strike her as odd that the right hon. Gentleman is so willing to think that the French will lend us their deterrent so long as we want to use it?

The Prime Minister: I think that the result of the visit to Washington was to clarify the position absolutely; to make it clear that Britain's independent nuclear deterrent will he modernised with Trident and that the United States will also modernise her strategic nuclear system with Trident. In the meantime, we shall continue, as a matter of priority, with the other things—negotiations on the INF agreement, on the 50 per cent. cuts over five years in the United States, provided, of course, that the Soviet Union will unlink the whole matter from SDI. The President was absolutely right to go ahead with SDI. I was asked, I think on a previous question, "What about research?". Research to me, in common-sense terms, means research up to feasibility.

Mr. J. Enoch Powell: Why, for the purposes of the Prime Minister's conference with the American President, was it necessary that officials of the Northern Ireland office should be kept on constant availability to supply emergency briefing?

The Prime Minister: If they were, it was not for me.

Mr. Michael Heseltine: Following the question to my right hon. Friend the Prime Minister from the right hon. Member for Plymouth, Devonport (Dr. Owen), does my right hon. Friend think that our independent deterrent is safer in the hands of our allies, the Americans, in preparing it, or in the hands of the Liberal party?

The Prime Minister: My right hon. Friend makes his own point very effectively. Opposition Members lose no chance of undermining our great ally, the United States, and take every chance of undermining Britain's defences, and, therefore, making us a possibly fellow-travelling nation.

Mr. Michael Foot: Did the Prime Minister have any discussions with the President on the desperately urgent question of stopping the proliferation of nuclear weapons and applying some ban on nuclear tests, or does she think that such a discussion would not go very well with her new well-found discovery of the advisability of selling weapons to terrorist states? If she agrees with the President of the United States on that subject, why does she think that the Secretary of State in the United States does not do the same?

The Prime Minister: The right hon. Gentleman also continues his usual policy of undermining our alliance with the United States. With regard to a comprehensive test ban, as the right hon. Gentleman knows, the question there is one of verification. Verification is absolutely crucial to any negotiations that we have with the Soviet Union on arms reduction. If we agreed without verification, we should be undermining the security, and therefore the freedom and justice, of Britain.

Sir Frederic Bennett: Although we all welcome the news that new attempts will be made to get rid of all medium-range nuclear weapons in Europe, on both sides, and subject to proper verification, can my right hon. Friend confirm that that process of reduction and ultimately, we hope, removal, will also apply to the so-called short-range nuclear weapons? The Soviets now have a clear superiority of 9:1, and many of those so-called short-range weapons can reach and destroy substantial parts of the United Kingdom.

The Prime Minister: Yes, that was part of the statement that we made. A zero-zero agreement on intermediate nuclear forces would be subject to effective verification and to strict control of the missiles replaced in the far east on Russian soil and in the United States. We are talking of about 100 missiles each. It would also be subject to negotiating at the same time on shorter-range systems. As my hon. Friend has said, the Soviet Union has an enormous preponderance of them, and a far greater number than NATO has. As my hon. Friend also pointed out, Britain is within their range, so that would have to be part of the INF negotiations.

Mr. Eric S. Heffer: Is the Prime Minister aware that some of us think that she skated far too quickly over the question of the United States giving arms to Iran? Can she tell us what exactly was said about that? Did the right hon. Lady make it clear that British people feel that no one should be selling or giving arms to Iran, which has a worse human rights record than any other nation in the world at present?

The Prime Minister: This country's policy on weapons to either Iran or Iraq has been set out. I make it clear that it is that

"(i) We should maintain our consistent refusal to supply any lethal equipment to either side;
(ii) Subject to that overriding consideration, we should attempt to fulfil existing contracts and obligations;
(iii) We should not, in future, approve orders for any defence equipment which, in our view, would significantly enhance the capability of either side to prolong or exacerbate the conflict;
(iv) In line with this policy, we should continue to scrutinise rigorously all applications for export licences for the supply of defence equipment to Iran and Iraq." —[Official Report, 29 October 1985; Vol. 84, c. 450.]

Mr. Nicholas Soames: What steps do my right hon. Friend and the President intend to take to give a fresh impetus to resolving the Arab-Israeli dispute?

The Prime Minister: We had some discussion of that. Many of us are very worried that there appears to be a gap at present in the negotiating stance. We think it important that, some time during the coming year, the impetus should be renewed in order to try to obtain negotiations between King Hussein and representatives of the Palestinians and the Israeli Government, against the background of an international group of people, as we have tried to do in the past. The difficulty arises in trying to obtain proper representatives of the Palestinian people. So far, we have not succeeded, but I imagine that efforts will be renewed.

Dr. Norman A. Godman: Did the President make any criticism, however mild, of the reckless decision to impose a fisheries zone round the Falklands, or did he offer his support to the Government over their foolish decision?

The Prime Minister: As I explained to the President, the decision was absolutely justified.

Dr. Godman: What did he say?

The Prime Minister: Since April 1985, we have tried to negotiate a multilateral fishing agreement.

Dr. Godman: What did he say?

The Prime Minister: We have not succeeded, because Argentina would not co-operate through the Food and Agriculture Organisation. I therefore explained to the President that when Argentina made bilateral agreements over waters that affected us, we had no option but to declare a 150-mile conservation zone. I think that perhaps for the first time the President understood the precise position. I also pointed out that it was Argentina that, within 200 miles of the Falklands, had shot at a Taiwanese fishing boat and killed some of those on board.

Sir John Biggs-Davison: Was there any discussion of the dollar fund for Ireland? Does the President know of the deep resentment felt over this, in Northern Ireland because of its link with the Anglo-Irish agreement?

The Prime Minister: No, that matter was not discussed at all; nor were Irish matters really on the agenda for that meeting.

Mr. Andrew Faulds: Did the Prime Minister consider, while she was in the United States, that General Vernon Walters, on his visit to London to disseminate the President's disinformation campaign

about Libyan activities, was actually lying to her? Has the possibility not crossed the Prime Minister's mind that the President, as regards hostages and Iran, was probably treating her likewise?

The Prime Minister: No, I reject what the hon. Gentleman has said. Many Opposition Members take every opportunity to try to find fault with the Americans.

Mr. Faulds: Was Vernon Walters lying?

The Prime Minister: I should make it absolutely clear that the Americans are our most important allies in NATO. Under President Reagan, the Alliance has gained in strength and, therefore, Britain and NATO's members have gained in security. By their attitude, Opposition Members do everything that they can to undermine Britain's fundamental security.

Sir Anthony Grant: When my right hon. Friend and the President discussed the consequences of the withdrawal of United States bases and of the unilateral abandonment of the British nuclear deterrent, did they also consider the consequences of the threatened resignation from any future Labour Government of the right hon. Member for Leeds, East (Mr. Healey)?

The Prime Minister: I did not go into that detailed matter. I think that the President, and indeed many members of the Alliance, are aware that the Opposition's present policy would fundamentally undermine not only Britain's security but NATO. That shows that they would never be fit to govern Britain.

Mr. A. J. Beith: How is it an act of friendship to our ally, the United States, to support the President on a venture that was not only wrong but was not supported either by some of the key members of his Administration or by the majority of the American people? Is that the sort of subservience that the Prime Minister expects from the President over the Falklands negotiations issue, or does she expect him to adopt a better view of the latest Argentine Government initiative than the Minister in the other place who, earlier this afternoon, said that it was just old wine in new bottles?

The Prime Minister: I have made our fisheries policy clear with regard to the Falklands. May I make our policy on sovereignty absolutely clear? We are not going to negotiate the sovereignty of the Falklands. I understand that Liberal Members, and perhaps SDP Members—although I am not quite sure about them—are prepared to negotiate sovereignty, but we are not. Perhaps that meets the hon. Gentleman's point.

Mr. Robert Adley: Is it not a major plank of Soviet propaganda to seek to equate the stationing of nuclear weapons and bases in eastern Europe with their stationing in western Europe? Does my right hon. Friend agree that that is a fundamental bit of disinformation, and that until countries such as East Germany or Czechoslovakia have the same opportunities as are found in democracies such as Britain or West Germany to choose whether they want allied bases stationed in their countries, she should remain extremely wary of such unfortunate comparisons?

The Prime Minister: With regard to the INF negotiations, we are talking about zero-zero in Europe with, subject to effective verification, 100 SS20s in the far


east of the Soviet Union and 100 missiles in the United States. It is therefore a global agreement. As I have said time and again, it will have to be subject to effective verification, and obtaining that will not be easy.

Mr. Merlyn Rees: When the Prime Minister met Mr. Shultz, did he express support for the President's policy?

The Prime Minister: I had a long talk with Mr. Shultz, and I think that the right hon. Gentleman will know that he has made a long speech. I think that Mr. Shultz understood our position perfectly. He was at Camp David, and he agreed with the statement which was put out.

Sir John Farr: Notwithstanding the view of the Leader of the Opposition, which on defence seems to come straight from Moscow, I ask my right hon. Friend to reaffirm that she made it clear to the President of the United States that there was no question of our surrendering or discussing the sovereignty of the Falkland Islands, or the surrounding 150-mile zone?

The Prime Minister: At that time I think that the proposal had not been made, but I shall make our position clear now. It used to be the position on both sides of the House — this was before certain leaders of the Opposition parties met Mr. Alfonsin—that the wishes of the Falkland Islanders were paramount and that self-determination was the policy. The wishes of the Falkland Islanders were paramount. I understand from what the Leader of the Opposition said when he met Mr. Alfonsin, and what he said at a press conference, that that is not his policy, and that it is the interests of the Falkland Islanders, interests determined not by the islanders but by other Governments. We stand by the policy that the wishes of the Falkland Islanders are paramount, and we have no intention of negotiating the sovereignty of the Falkland Islands with the Argentines.

Mr. Allen McKay: May I return to the supply of arms to Iran? Will the Prime Minister assure the House and those outside that the armaments supplied are not those that could be used against British seamen in the Gulf? Have the Government any intention of reviewing instructions that are given to the seamen who sail the Gulf?

The Prime Minister: We are watching that extremely carefully because obviously, if need be, those seamen will have to be protected. The position on the supply of armaments either to Iran or Iraq is as I set out in detail. I was reading from a statement made to the House by my right hon. and learned Friend the Foreign Secretary in answer to a question on 29 October 1985. That is still the policy.

Several Hon. Members: rose—

Mr. Speaker: Order. I must take into account the fact that we have a heavy day in front of us. I shall call two more Members from each side of the House and then we must move on.

Mr. David Ashby: Did my right hon. Friend explain to the American President the Government's abhorrence of the Iranian regime, especially its mass executions of the Bahai people? Did she explain also to President Reagan that we would not allow Land Rover to export to Iraq?

The Prime Minister: We share my hon. Friend's views on human rights in Iran. As he knows, we frequently make statements about them. As my hon. Friend knows as well, we have diplomatic representation in Iran to follow up these matters and to let us know about them.
What was the second part of my hon. Friend's question?

Mr. Ashby: About Land Rover exporting to Iraq.

the Prime Minister: That would fall within the fourth criterion to which I have referred. As far as I am aware, we have not yet received any request for an export licence.

Mr. D. E. Thomas: The Prime Minister has mentioned verification about six times. Does she accept that it would be scientifically feasible to verify the exploding of nuclear devices for the test purposes to a low level of yield? Will she therefore tell the House what aspect of verification she is still concerned about?

The Prime Minister: No, I do not accept—I have answered in detail questions on this matter in the House —that we can absolutely verify testing sufficiently for a full comprehensive test ban treaty. I believe that it can be done sufficiently, however, for two minor treaties that have yet to be ratified by the United States.

Mr. Nigel Forman: Is my right hon. Friend aware that those of us on the Government Benches who are increasingly concerned about the present and prospective military imbalance within Europe were relieved to learn that one result of her talks in Washington was to confirm that, while supporting the idea of 50 per cent. cuts in strategic missiles by 1991, she is now attaching what I 'might call the French condition to further cuts, which is that the Soviet Union should make disproportionate and naturally just reductions in its conventional superior forces in Europe before we would agree to go beyond that point?

The Prime Minister: Yes, the statement read:
reductions in nuclear weapons would increase the importance of eliminating conventional disparities. Nuclear weapons cannot be dealt with in isolation, given the need for stable overall balance at all times.
I stress again to my hon. Friend that the discussions at Reykjavik have not altered so far the position on the ground. I believe that the programme of priorities which I have set out would take a long time to complete. The first step would be to see whether these matters could he verified effectively.

Mr. James Lamond: Is the Prime Minister aware that in seeking to convince us against all logic that the way towards peace between Iraq and Iran is to send arms to one side, and the way towards world peace is to arm ourselves to the teeth, in the meantime increasing our nuclear weaponry as much as we can, she has convinced the British people that her protestations about being a multilateral disarmer are just so much nonsense, and that she is only a rubber stamp for the President of the United States?

The Prime Minister: The hon. Gentleman is talking nonsense, and he knows it. The hon. Gentleman's policy is for Britain to give up her weapons unilaterally and for the Soviet Union to keep its. That may be his policy, but it is not ours.

NEW MEMBERS

The following Member took and subscribed the Oath: George Howarth Esq., for Knowsley, North.

Arts Council (Budget)

Mr. Tony Banks: On a point of order, Mr. Speaker. I do not want to delay the House very long. We have just had an important statement, but some statements these days are of the "small fire in a chip pan" variety. Yesterday, an important announcement was made by way of a planted written question on the Arts Council's budget, something which has become a regular practice with the Government. The Arts Council's budget will suffer a real cut in terms of the money that it is to receive from the Government. I asked whether this issue could be the subject of a private notice question today—

Mr Speaker: Order. I hope that the hon. Gentleman will not disclose discussions about private notice questions.

Mr. Banks: I wish merely to mention that, Mr. Speaker, because I wanted—

Mr. Speaker: Order.

Mr. Banks: In that case, Mr. Speaker, I do not want to mention that.
Would you not state, Mr. Speaker, that it is wrong for the Government to make an important announcement that interests many thousands, which we read about in the newspapers today in which aroused a great deal of interest, by means of a planted written question so as to dodge their responsibility to defend the decision that has been made at the Dispatch Box'? Surely, Mr. Speaker, you must say that it is a practice that you do not condone.

Mr. Speaker: I do not recognise this planted question issue. I do not give reasons for turning down private notice questions, but if the hon. Gentleman reads the answer to which he has referred, he will see that it concerns the Arts Council's budget for 1987–88. It would seem that there is reasonable time to discuss these matters before then.

Mr. Andrew Faulds: Further to that point of order, may I simply, to save time, say, "Ditto, ditto," to everything my hon. Friend has said?

Mr. Speaker: I shall say, "Ditto, ditto," too.

BILL PRESENTED

NORFOLK AND SUFFOLK BROADS

Mr. Secretary Ridley, supported by Mr. Secretary Hurd, Mr. Michael Jopling, Mr. Kenneth Clarke, Mr. John MacGregor, Mr. Secretary Channon, Mr. Secretary Moore and Mr. William Waldegrave, presented a Bill to establish an authority to be known as the Broads Authority; to make provision with respect to its powers; to make provision with respect to the area commonly known as the Broads and with respect to the Great Yarmouth Port and Haven and its Commissioners; to provide for the making of grants to the Authority by the Secretary of State; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 6].

WELSH AFFAIRS

Ordered,
That the matter of the Queen's Speech and its effect on Wales, being a matter relating exclusively to Wales, be referred to the Welsh Grand Committee for its consideration.—[Mr. Portillo.]

Statutory Instruments, &c.

Mr. Speaker: With the leave of the House I shall put together the six motions to approve the statutory instruments.

Ordered,

TRAFFIC WARDENS

That the draft Functions of Traffic Wardens (Scotland) Amendment Order 1986 be referred to a Standing Committee on Statutory Instruments, &amp;c.

JUDGES (SCOTLAND)

That the draft Maximum Number of Judges (Scotland) Order 1986 be referred to a Standing Committee on Statutory Instruments, &amp;c.

FOOD PROTECTION

That the Food Protection (Emergency Prohibitions) (No. 8) (Amendment No. 6) Order 1986 (S.I., 1986, No. 1900) be referred to a Standing Committee on Statutory Instruments, &amp;c.

BUILDING STANDARDS (SCOTLAND)

That the Building Standards (Scotland) Amendment Regulations 1986 (S.I., 1986, No. 1278) be referred to a Standing Committee on Statutory Instruments, &amp;c.

NEW TOWNS

That the New Towns (Suspension of Loan Repayment) Order 1986 (S.I., 1986, No. 1436) be referred to a Standing Committee on Statutory Instruments, &amp;c.

CIVIL AVIATION AUTHORITY

That the Civil Aviation Authority (Economic Regulation ofAirports) Regulations 1986 (S.I., 1986, No. 1544) be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Portillo.]

Question agreed to.

EUROPEAN COMMUNITY DOCUMENTS

Mr. Speaker: With the leave of the House I shall put together the two motions relating to European Community documents.

Ordered,

MOTORCYCLE NOISE

That European Community Documents Nos. 9184/84 and 6766/85 on motorcycle noise be referred to a Standing Committee on European Community Documents

DOMESTIC APPLIANCES (NOISE)

That European Community Documents Nos. 4293/82 and 10998/83 on noise emitted by domestic appliances be referred to a Standing Committee on European Community Documents.—[Mr. Portillo]

Question agreed to.

Orders of the Day — Debate on the Address

FIFTH DAY

Order read for resuming adjourned debate on Question [12 November]:
That an humble Address be presented to Her Majesty, as follows: Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.—[Mr. Rippon]:—

Question again proposed.

Industry and Employment

Mr. Speaker: Before we start this debate I must tell the House that a large number of right hon. and hon. Gentlemen have indicated a wish to take part in this the fifth day of the Debate on the Address. I have no authority to limit speeches to 10 minutes—

Mr. Tony Banks: Shame.

Mr. Speaker: —during this debate. I hope that not too many people will be disappointed. May I be allowed to continue to say that if hon Members are economical in their speeches it will be possible to call many more or them. I must tell the House that I have selected the amendment in the name of the Leader of the Opposition.

Mr. John Smith: I beg to move, at the end of the Question, to add:
But humbly regret that the Gracious Speech contains no credible strategy for securing a continual reduction in unemployment or for strengthening and modernising manufacturing industry and recapturing home and foreign markets for British goods.
Today we debate the crucial and fundamental issues of employment and industry. Despite the Government's blatant attempts to cook the figures by means of 18 different alterations in the collection and presentation of unemployment statistics, as we all know unemployment is frighteningly high. The real figure is in excess of 4 million, whatever the Government's cooked statistics present. Of that total, a frightening number are under the age of 25. Some 1·25 million of them are on the dole and 1·3 million are classed as being in long-term unemployment. For many of them the prospect of any employment in future must look bleak.
The cost of unemployment to the nation is £22 billion. That is a frightening commitment in terms of public expenditure, let alone in terms of the human misery that these figures reveal. In the northern part of Britain, too many of our communities have been devastated by the unemployment which has come to visit them since the Government took office.
I wish to concentrate on the problems that beset manufacturing industry. Since 1979, 20 per cent. of our manufacturing industry has disappeared. I doubt if there is any period in our economic history during which there has been such a wholesale reduction in the industry which sustains the productive capacity of Britain.
Despite the Government's windfall of North sea oil which none of our principal competitors in western Europe — with the exception of Norway — have had, despite the enormous revenue benefits that that has brought and the support it has provided for balance of trade and the balance of payments, we have seen a steady economic deterioration in manufacturing industry since 1979. The most frightening aspect of that—there is not a word about it in the speeches by Ministers or a single reference to it in the Gracious Speech—is the alarming deficit in the balance of trade on manufactured goods. In the first nine months of this year, that deficit was just under £4 billion— £3,997 million, to be precise.
Since the industrial revolution and up until 1982, Britain was always in surplus in the balance of trade on manufactured goods. We slipped into deficit under this Government in 1983 and have continued downwards ever since. Unless there is some dramatic change in the figures for the last quarter of this year — there can be no reasonable expectation of such a dramatic change—the outturn figures for 1986 will show Britain in deficit to the extent of £5 billion on manufactured goods.

Mr. Phillip Oppenheim: Could the right hon. and learned Gentleman tell the House the trend of the figures in our manufacturing trade balance during the years of the last Labour Government? Was the balance in our favour, and was it falling or rising?

Mr. Smith: If the hon. Gentleman had listened a little more carefully, he would have saved himself the trouble of putting that question, because, throughout the whole of the period in which the Labour Government were in office, we had a surplus in the balance of trade on manufactured goods. Perhaps I could be generous about the matter. Throughout the term of office of all previous Governments we were in surplus on that balance of trade.

Mr. Oppenheim: Was the balance rising or falling?

Mr. Smith: The hon. Gentleman may have misunderstood the point that I am trying to make, but it is simple and clear. We went into deficit under this Government for the first time in our history and the position is getting worse and the trend is towards a deficit of £5 billion in 1986. Perhaps for once the Secretary of State for Trade and Industry will address himself to this matter because the country needs to know the Government's policy about the balance of trade on manufactured goods. What is the strategy for returning us to a surplus? What is the Government's attitude to that? The Prime Minister constantly tells us that exports are rising, but she never tells us that imports are rising faster than at any time in our history.

Mr. Kenneth Hind: Will the right hon. and learned Gentleman kindly explain to the House and to the people in the north-west and in Avon how, in his intention to build up the manufacturing export base of Britain, the commitment of the Labour party to abolish all the export organisations attached to the Ministry of Defence and its military advisers, which produced £2.8 billion-worth of exports in 1985 and more in 1986, will help industry and employment?

Mr. Smith: I can explain that quite simply. The Labour party's non-nuclear defence policy will be of far greater

assistance to British industry than the policy pursued by the Government, too much of which has to do with assisting industries in other countries rather than in this country.
Perhaps I could return to my main point. Have the Government any strategy for reversing the balance of trade in manufactured goods, or will we continue until, in 1990, as the economic department of Lloyd's bank predicts, we will have a balance of trade deficit in manufactured goods of over £13 billion? There will not be much in the way of economic manoeuvre then, whichever Government are in power; and that is what will happen if present policies continue. I hope that the Secretary of State will address himself to this matter, because the Government must face this problem.
The other serious problem that faces Britain and which is shown by the pattern of industrial development and unemployment is the north-south gap. Many of the areas that were once the powerhouses of British industry are in frightening decline. A most revealing document on this matter is the regional development fund submission by the Government to the EEC. The Government have wriggled a lot in seeking to explain away this document, but in terms of Community law the Government were obliged to submit such a document. The document clearly said that the Government did not think that there would be a reduction in unemployment below 3 million by 1990. Clearly, there are no plans in the Government's strategy to effect any reduction in unemployment between now and 1990—a long period.
What is interesting above all is what the Government said in the document about various parts of Britain. On the west midlands, they predicted an increase in the working population and a fall in the number of jobs available and concluded:
These features suggest little prospect of an improvement in the region's basic unemployment problem in the period between now and the end of this decade.
The people of the west midlands have been told to expect no solutions from the Government.
The document says:
Continuing restraints on public expenditure … curtail the resources which central, local and public sector authorities have available to undertake development programmes or take advantage of significant infrastructure development opportunities. This in turn limits employment arising from construction programmes and major capital projects.
That is correct. Every year, requests for a modest public works programme by Labour Members, people involved in other parts of the economy and even the CBI have been turned down flat by the Government, although they know perfectly well that the easiest, most effective way of getting some of the 400,000 unemployed building workers back to work is through a public works programme. Such a programme would put those building workers back to work improving houses, modernising the inner cities and improving the down-at-heel public infrastructure which afflicts so many communities.
On the northern region, the Government's report states:
The most important problem facing the area is unemployment. The present high levels of unemployment are unacceptable, but the situation will not improve until a number of other more fundamental problems are resolved.
The document details those fundamental problems:
weak economic infrastructure, lack of investment, an excess of unskilled and shortage of skills, environmental dereliction and social deprivation in education and health particularly.


On Scotland, the prospects for Strathclyde are described as follows:
Overall therefore, there appears to be little possibility of sufficient expansion in the economy to reduce unemployment significantly in the next few years.
The prediction for Yorkshire and Humberside is:
Future employment prospects are not encouraging. Employment levels are unlikely to rise in the short or medium term".
On Wales, the comment is:
The overall economic activity rate in Wales is lower than any other region of Great Britain and is expected to remain so during the period that this programme covers.
That is until 1990. On the north-west, the description of Greater Merseyside is:
Prospects for reducing unemployment are frighteningly bleak — there are only approximately 4,100 unfilled vacancies in the sub-region.

Mr. Cecil Franks: Will the right hon. and learned Gentleman refer to the Labour party's manifesto and the Labour party conference decisions? I remind him what will happen in Cumbria, where 16,000 jobs will disappear at Sellafield and 9,000 will disappear in Barrow because of the cancellation of Trident. What does the right hon. and learned Gentleman propose to put in their place?

Mr. Smith: It is not surprising that the hon. Gentleman wants to distract attention from the Gracious Speech; nor is it surprising that he should wish to distract attention from the European regional development fund, about which I thought he would ask me. His misconstruction of the Labour party's manifesto commitments is patently absurd and I shall not waste my time bandying words with him on that.
The document submitted by the Government to the EEC displays a frightening picture of the reality of life in Britain today, especially the difference between the north and the south. What was the Government's answer? The Chancellor of the Duchy of Lancaster told us, when he was in a different capacity, that the unemployed of the north had to get on their bicycles and move to the south. We have seen that happen, with unemployed people from the north moving down to areas of relative prosperity. In many cases they find jobs fairly easily, but then they run into the housing problem. Even if the husband and wife both work, they discover that, even with the maximum mortgage they can get, the amount they have will be probably 15,000 below the lowest house price in the area. Therefore, they must either commute between their families in the north and their work in the south—to the destruction of family life and at enormous expense —or retreat, disillusioned and defeated, back to the communities from which they came.
Would it not make much more sense if we sought, for once, to have a regional industrial policy that brought work to the areas where people were willing, able and anxious to work and where we had used high expenditure to build up communities, instead of forcing people to tramp all over the country like industrial gipsies looking for employment wherever it can be found and unable to sustain it because of the circumstances which I have mentioned?

Mr. Richard Hickmet: Will the right hon. and learned Gentleman give way?

Mr. Smith: No. Hon. Members cannot accuse me of not giving way, because I have given way three times during

my short opening remarks. [Interruption.] Conservative Members cannot distract me with their continual chatter. They should listen to some of the points which I have made and to the criticism of their policy.
Today, in regard to one of our most important industries, crucial decisions will be taken in the Council of Ministers. I hope that the Secretary of State for Trade arid Industry will tell us the Government's plans for the shipbuilding industry. As he knows, with the EEC phasing out existing schemes for support by the end of this year and deciding what type of intervention will start on I January 1987, a crucial decision must be taken.
The right hon. Gentleman well knows the rapid decline in Britain's merchant shipbuilding industry. The number of employees in the industry is down to 5,000 or 6,000. It is crucial that the Government fight for a proper support system. An independent report obtained for the European Commission by A and P Appledore suggested that the level of support should be 36 per cent. The EEC's proposal is for 26 per cent. I hope that the Government will fight for an increase towards the level of 36 per cent. If they do not, there can be little confidence that the British merchant shipbuilding industry will survive. Indeed, British Shipbuilders' chairman has used those terms.
We must decide—this goes for other countries in the Community as well as for the United Kingdom — whether we will surrender the shipbuilding industry to far east competition or whether we will maintain it so that it is there when the upturn in orders comes in the 1990s. I cannot believe that any Government would decide that a trading nation such as Britsin should not have a merchant shipbuilding capacity, when so many of our goods go round the world in British ships.
There is the twin problem also of the catastrophic decline in the British merchant shipping fleet since the Conservative party came to office. As my hon. Friend the Member for Dunfermline, East (Mr. Brown) pointed out recently in a letter to the Secretary of State.
Without a tougher Government bargaining position, Britain laces the prospect of conducting our trade and protecting our defences in ships built in Japan or Taiwan, repaired in Korea, crewed in Panama, and flying the flag of Liberia".
I hope that we never reach that stage, but the position is as crucial as that. I hope that the Secretary of State will clearly set out his commitment.

Mr. Don Dixon: Is my right hon. and learned Friend aware that the EEC Commission, acting on a report by the Court of Auditors, has decided to stop the allocation of non-quota regional development funds, which are designated for shipbuilding areas, because certain funds have been misappropriated by the Government?

Mr. Smith: My hon. Friend has properly drawn attention to another serious matter. The Government have not been committed to the British shipbuilding industry but they have the opportunity today in the European Community to make that commitment clear. I hope that the result will be that the Government will play their part with other countries in saving the EEC's shipbuilding industry from extinction.

Mr. Hickmet: rose—

Mr. Smith: I am not giving way to the hon. Gentleman at this moment.
Another industry of crucial importance, about which the Government are extremely shifty when they make any statements to the House, is the motor vehicle industry. We know the tangled tale of the Government's policies towards the British motor vehicle industry which was played out during the earlier part of the year. They attempted to get rid of British Leyland and Land Rover to General Motors. We know of the ignominious retreat of the Government from that policy. Perhaps even worse, we know about the surreptitious plot to sell the Austin Rover group to the Ford Motor Company, which might have been known to some of the directors of Austin Rover but was certainly not known to most of the senior management in the company. I am glad to say that the Government were forced to retreat in rapid disorder from that sordid position as well.
The trouble now is that they have lapsed into inactivity. I suspect that, because of fear of electoral consequences, the Government will not move to do any more damage to the British motor vehicle industry between now and the next general election.

Mr. Robert Atkins: rose—

Mr. Smith: I will not give way.
It is not enough for the Government to have no policy towards the British motor vehicle industry. What is needed, especially for Austin Rover, is a strong commitment by the Government to see the company through to success. Other Governments give that support to their motor industry. It is high time our Government gave that support to our industry. The Government's objective is to privatise the Austin Rover group rather than see it through to success. We fear that in order to assist that process they will reduce the volume of production from above 400,000 down to what they might regard as a profitable niche at about 200,000. That would involve substantial job losses, the closure of plants and a further retreat of one of our important engineering industries. Let us never forget that it is not just the industry which is at stakes it is all the component supplying firms as well. They are an important part of the economy notably in the west midlands, but of many other parts of the industrial structure of the United Kingdom.

Mr. Robert Atkins: rose—

Mr. Smith: I hope that the Secretary of State can say without equivocation that the Government stand solidly behind the motor vehicle industry. That is the view of the Opposition: I wish it was shared by the Government.
The other area in which I believe the Government are in danger of going badly wrong is in connection with the steel industry. The notion floated recently in a letter by the Prime Minister to the hon. Member for Glanford and Scunthorpe (Mr. Hickmet) was that the Government intended, after the next election, to privatise the British Steel Corporation. Of course, there are two elements to that policy. In order to create the profits that would be a necessary prelude to privatisation, the danger is that there would be substantial cutting of existing steel plant as it presently exists. That would be bad enough. The notion that a long-lead, long-term strategic industry such as the British steel industry should be surrendered to the short-term perspectives of the City of London strikes me as

absurd. One of the crucial issues at the next election for people in the steel communities and the industrial areas of this country will be to realise that, if they elect a Conservative Government, the British Steel Corporation will be privatised. I think that they will be able to weigh that up very easily for themselves. If I may say to the hon. Member for Glanford and Scunthorpe, it was not wise to get the Prime Minister to write that letter to him.

Mr. Hickmet: I am grateful to the right hon. and learned Gentleman for advising me on my election campaign. It was under Government ownership, as a nationalised industry, that 120,000 steel workers lost their jobs. It was because of the interference of Government in the way in which that industry operated that the British Steel Corporation got into that appalling mess. Before the right hon. and learned Gentleman laughs too much, he will recall that that happened because his Government shelved the Beswick report. Now, the hon. Member for Kingston upon Hull, East (Mr. Prescott) wants to double the work force and reduce it to penury again. Return it to the commercial sector, and run it properly.

Mr. Smith: I could hardly accuse the hon. Gentleman of making a precise point. That was a rambling intervention. It was interesting that he did not attempt to justify privatisation. I hope that he is not expecting Opposition Members to accept responsibility for policies towards the steel industry, which has been run by this Government since 1979. The hon. Gentleman should make up his mind. He is sometimes telling us how successful the steel industry is and claiming that if that is true it must be a success that is accorded to the public sector, as well as any deficiencies that are accorded to the public sector. The hon. Gentleman should get his act straight before he meets his own electorate.
The only hope for the British steel industry—

Mr. Richard Holt: rose—

Mr. Smith: I think that I have given way more than most people would in a speech of this kind.

Mr. Holt: It is on the steel industry.

Mr. Smith: I do not care how often the hon. Gentleman mentions the steel industry, I am not giving way. He knows the rules perfectly well. Conservative Members know that I have already given way far more than people normally do in a speech of this kind. I think that they are insatiable on this matter.
Crucial decisions have to be made on aerospace. To be fair to the Government, they did support the A320 programme.

Mr. Roger King: Privatised.

Mr. Smith: It was privatised, but it cannot fund Airbus on the private markets. That is the point that the hon. Gentleman should grasp. When British Aerospace was privatised, the Government said, "That is marvellous. We do not need to worry about it any more, it is a burden off the back of the Government." However, on the first major international project it is looking for assistance from the Government because it says that the private market and private ownership cannot face up to the responsibilities of being involved in Airbus. That does not seem to be a good case for the privatisation of British Aerospace.

Mr. Michael Heseltine: rose—

Mr. Smith: Please note—I am giving way to the right hon. Gentleman.

Mr. Heseltine: Perhaps the right hon. and learned Gentleman could remind the House what it was that persuaded the previous Labour Government to pull out of Airbus.

Mr. Smith: I think that mistakes have been made in the past. Indeed, the right hon. Gentleman might have made a few fairly recently. One thing is clear: there will be no future for British civil aerospace unless the Airbus project goes ahead. I would have preferred the right hon. Gentleman to say he supports the case I am making instead of trying to make cheap party political points. The right hon. Gentleman, who espouses the view of the national interest, which sometimes differs from the Government Front Bench, could be usefully employed in supporting some of these projects during his temporary idleness on the Back Benches. I hope that Conservative Members will join in pressing the Government to support the Airbus project, especially the A330 and A340 submissions which are about to go to the Government, if they have not already arrived. There will be no future for civil aviation unless the Airbus project is supported.

Mr. James Callaghan: My right hon. and learned Friend is making a powerful speech. In the interests of accuracy, would he remind the House that it was the Labour Government in 1978 who negotiated our way into the Airbus project when there was a great deal of competition and a desire by some other nations to exclude us? The right hon. Member for Henley (Mr. Heseltine) knows that perfectly well.

Mr. Smith: I am grateful to my right hon. Friend for putting the record straight about the period when he was responsible for handling these matters.
The important question, which Conservative Members do not seem to wish to engage in, is, what the Government are going to do about the project now? If they come out of Airbus or do not give British Aerospace the support which will allow it to continue as a full member of Airbus, there are other people who will want to join the consortium instead of British Aerospace. I hope that it might be possible for Conservative Members, now and again, to glimpse the national interest and, when they see it, to support it.
Another industry of great importance to this country is information technology. We are again seeing Britian slip behind. A substantial part of our deficit in the balance of trade in manufactured goods comes from that so-called sunrise industry. The figures for recent years show a pathetic record. In 1979, the deficit in the office and data processing trade was £227 million. Last year it had risen to £670 million. In electronics engineering, the deficit in 1979 was £164 million and in 1985 it was over £1,000 million. And that is in one of the newer industrial areas, making up a substantial part of the deficit in our balance of trade in manufactured goods. It is not simply a case of some decline in the older industries; it is affecting the whole of our industrial structure.
One of the National Economic Development Office's reports, chaired by Professor Ashworth — an excellent report compiled by leaders of business, trade unions, independent experts and Government servants—marked out a strategy for information technology. It is lying

gathering dust on a shelf in the Department of Trade and Industry. No action has been taken to correct the serious deficiencies in our national policy.
The Ashworth report says:
A sunrise industry … is being eclipsed before it has even risen … in the new industrial revolution we are failing to the point where we cannot maintain key technologies … on present trends we will not have an independent broad based IT industry by the end of the decade.
Those are chilling words for anyone who cares about Britain's industrial future.
But have the Government any strategy whatsoever for the information technology industry? None at all. That is because they do not believe in industrial strategies. They do not believe in planning for the success of Britain's industry in this competitive world in which we struggle to make a living. There was a short period when the Government seemed to espouse the sunrise industries, when the present Secretary of State for Education and Science had a role to play in the Department of Trade and Industry, but that was a mere flickering, arid it disappeared. The Government have sunk into slumber again on this crucial part of our industrial future.
One of the reasons why, in all those areas of industrial activity that are selected for discussion today, there is no strategy, no driving force to make the necessary changes, is partly that there has been a decline in the role of the Department of Trade and Industry. It has now been marginalised almost into insignificance. Such initiatives as the Government take, such as the Urban Development Corporation programme, come from the Department of the Environment. Other initiatives may come from time to time from the Department of Employment, but never is there a spark of anything from the Department of Trade and Industry.
Secretaries of State have come and gone in bewildering succession. Sometimes I feel like a force for order and stability in the House when I look at the number of people flitting back and forth, who temporarily hold the seats in the Department of Trade and Industry. It is not just that the Government think so little of the Department as not to man it properly and intelligently, but the notion of having a powerhouse Department of Trade and Industry — a policy that any intelligent Government would follow—runs contrary to the Government's strategy for British industry, which is non-intervention, non-involvement.
In our successful competitor countries, there has been plenty of Government leadership and involvement, but that is not to happen here. That is why the expenditure of selective assistance to industry has halved since 1979. Our regional industrial policy is in tatters. Unemployment has mushroomed in all those areas, as the Government have withdrawn their responsibility for the economic health of those areas. Even worse, the expenditure is planned to halve yet again a few years ahead.
There is no reference to those problems in manufacturing industry, of regional decline and of rising unemployment in the Queen's Speech or the autumn statement. The Secretary of State did not fight for another halfpenny from the Government for any programme that his Department had in mind because the Department, under his leadership, has no programme in mind for attacking the problems of manufacturing industry.
However, the Government must now know, as the whole House knows, that unless we build up our


manufacturing industry, not only will we not be able to create the wealth that alone will sustain a civilised society, but we shall not be able to pay our way in the world. We shall not be able to turn round the catastrophe in the balance of trade in manufactured goods. What is the Government's attitude to that? The Government are complacent. They hardly seem to know that the problem exists. In the Prime Minister's own contribution to the debate on 12 November, she took refuge in the selective use of statistics, and said that things were fine because "manufacturing investment grew by 5·5 per cent. in 1985." What the right hon. Lady did not tell us was that at this stage investment is 17·1 per cent. less than in 1979. What is the point of going 5 per cent. forward if one remains 17 per cent. behind?
The right hon. Lady also drew attention to the fact that
Manufacturing export volumes are at record levels."—[Official Report, 12 November 1986; vol. 105, c. 17.]
She did not say that imports are going through the roof and that since 1979 manufacturing import share of British markets has gone up by 30 per cent. What an increase in the penetration of our market by our competitors since the Government came to office. That is why we have drawn attention to that matter in our amendment. We believe that the time is overdue for Britain to have an industrial strategy and to make sure that the investment is available for British industry and that there is sufficient expenditure on research and development, which is crucial to the new products and processes upon which we may make our living in decades ahead. That is why education and training are of fundamental and vital importance to the rebuilding of our industrial structure.
None of that will happen under the present Government. In the past seven years, we have seen a sad and debilitating decline in British manufacturing industry associated with the steepest rise in unemployment in our history and the sharpest deceleration in the health of the economies of the older industrial areas. Now this country is deeply divided, socially, politically, industrially and economically. Those are the results of the foolish, free market policies of Government non-intervention, and the decision to turn our back on the crucial wealth-creating part of our society—our manufacturing industry.
Meanwhile, we in the Labour party are clear on two things. First, we must wage war on unemployment. That is why the Labour party is committed, in the first two years of government, to reducing unemployment by 1 million, as a step along the road to getting back to a society in which the Government take responsibility for employment. I thought that the problem had been solved in 1944, but here we are in 1986 still asking the Government to accept that basic responsibility. It is one that we gladly accept and will discharge.
Secondly, the rebuilding of manufacturing industry will be one of the crucial tasks for the Labour Government. Without the policies that Labour proposes, that industrial recovery will not occur. I am glad that the day when the policies will change and when the Government will change is only months, not years, ahead.

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon): Once again — we have heard it often — the right hon. And

learned Member for Monklands, East (Mr. Smith) has given the House his usual doom-laden and depressing account of the condition of British industry as he sees it. Once again, his description bears little resemblance to reality. It is not surprising, with his party in that condition. It is a characteristic of his party that no matter how good the news may be, no matter how much progress is being made, Labour Members will always paint the worst possible picture, and portray the situation in the worst possible light. They revel in it.
I am happy to tell the House that the position of British industry today bears no resemblance to that described by the right hon. and learned Gentleman. In fact, the outlook and prospects for British industry are better than they have been for many years. We are now in our sixth successive year of steady growth. [Laughter.] It is a laughing matter to Labour Members. Over the past three years, our growth has averaged around 3 per cent., combined with low inflation—a combination that has not been achieved for a generation, and certainly has not been achieved under a Labour Government. As a result, investment is at record levels. Company profits rose by 20 per cent. last year alone, and company profitability is at its highest for over 20 years. I am not sure whether the Labour party still derides profit. Sometimes its policies seem to be designed to ensure that no company ever makes a profit again.

Ms. Clare Short: Will the right hon. Gentleman give way?

Mr. Channon: I am only at the beginning of my speech —the opposite of a peroration.

Ms. Short: rose—

Mr. Channon: Very well.

Ms. Short: I am grateful to the right hon. Gentleman for giving way. I represent a constituency in the west midlands, the heartland of Britain's manufacturing sector. In the central core of Birmingham, 300,000 people are living with 30 per cent. unemployment. That is the biggest collection of poverty in the whole of western Europe, and is the effect of the decline in Britain's manufacturing industries. The Minister cannot pretend that that picture is acceptable or tolerable.

Mr. Channon: I will deal in detail with the points made by the hon. Lady and by the right hon. and learned Member for Monklands, East. I will explain to the House that the picture of industry upon which the right hon. and learned Gentleman concentrated, very understandably, is a travesty of the truth.
No one denies that there are serious unemployment problems; that is common ground in the House and is understood and appreciated by everyone. My right hon. and learned Friend the Paymaster General and Minister for Employment will say more about that —indeed, he said more on that subject during Question Time today and in a recent debate.
I remind the House that the number of vacancies now stands at its highest level for seven years and the fall in the unemployment register over the past three months is the greatest for 13 years. That is the good news, which the Opposition are unprepared to accept.
In the past, the Labour party has always been opposed to profits, but greater profits lead to greater investment and that leads to more jobs. On that front the outlook for industry is good. The right hon. and learned Gentleman


devoted most of his speech to the manufacturing sector, and said that manufacturing industry is in almost terminal decline. That is simply not true. As a proportion of our national output, manufacturing output has declined. However, it has also done that in France, West Germany, the United States of America, Japan and almost any developed economy one could care to name.
Although this may come as an amazing shock to the Opposition, that decline did not start on 3 May 1979. It has been taking place for many years, including the years when the Labour party was in office. My hon. Friend the Member for Amber Valley (Mr. Oppenheim) stressed that point in this intervention. The only contribution that the Labour party made was to exacerbate the problems of manufacturing by standing in the way of change and by attempting to prevent the adaptation of our economy. Manufacturing industry was burdened with yesterday's methods, yesterday's techniques and yesterday's products while our competitors all over the world were producing goods more cheaply, quickly and efficiently.
It is impossible to stand in the way of change if we want to see a prosperous productive economy—an economy which is constantly changing. I believe that we have to encourage and assist that process and not try to prevent it. As a result, manufacturing industry has been adapting and growing. Since the end of the recession in 1981, output has risen by 13 per cent. While, in common with most other industrial countries, there was a slight pause earlier this year, there are now clearly signs of a resumption in growth with manufacturing output up 1 per cent. in the last quarter and forecast to grow by a further 4 per cent. next year.
In addition—and we did not hear a word from the right hon. and learned Gentleman about manufacturing efficiency—productivity is up by more than 30 per cent. since the end of 1980. That is an average of 5 per cent. a year over five years. During the lifetime of this Government, it has grown by an average of 3·5 per cent. a year—a growth record second only to Japan and four times as fast as under the Labour Government.
Let there be no doubt that the basis for continued expansion has been laid with buoyant profitability now at its highest level since 1973; rising investment which has risen 30 per cent. since its trough in 1983 and buoyant exports up by 18 per cent. since 1979 to record levels. Of course, manufacturing remains a vital contributor to the country's wealth. I cannot imagine a healthy and prosperous British economy without a thriving manufacturing sector.

Mr. John Smith: If things are progressing so splendidly, why is there a £5 billion deficit in the balance of trade on manufactured goods?

Mr. Channon: I am coming to that. I am telling the House the position in manufacturing. It is no more and no less important than any other sector. It now accounts for only one fifth of gross domestic product and one quarter of employment. The Opposition seem to think that the other four fifths and three quarters are irrelevant or worthless. That attitude is simplistic and wrongheaded.

Mr. John Swith: I did not suggest that.

Mr. Channon: The right hon. and learned Gentleman spoke for 35 minutes without mentioning anything else. I am entitled to assume that he is prepared to concentrate

only on that one sector of the economy. It is a very important sector, but it is not the only sector. He ignores the contribution to our economy and national wealth of millions of people who are doing worthwhile and productive jobs.
The Government's policy should be to help both sectors of the economy succeed by creating a climate in which enterprise and business can flourish. The key to that is competitiveness in both cost and non-cost factors. Inflation has been brought under control — although, not surprisingly, we did not hear much about inflation from the right hon. and learned Gentleman.
Since mid-1983, inflation has averaged below 5 per cent. and in the past year industry's fuel and raw material costs have actually fallen. The one cloud on the horizon is unit labour costs, which in the past year have risen much faster in Britain than in our major competitor countries. The implications for competitiveness are obvious. High pay settlements must not be allowed to swamp the effects of productivity improvements. Rather, we need to take the benefit of those improvements in more competitive prices, leading to higher sales, higher output and more jobs. That is the message for all kinds of industry and the message that should go out from both sides of the House, although it does not seem to.

Mr. William Cash: Does my right hon. Friend, who has published an extremely interesting and worthwhile pamphlet on quality in British industry, accept that the quality of production is infinitely more important than many Opposition Members give it credit for? Furthermore, the Opposition's continual ranting on about the volume of production will be of no use to this country unless we produce goods of comparable quality with other places abroad.

Mr. Channon: I entirely agree with my hon. Friend. Quality and design are crucial aspects of British industry and I shall say a word about them in a few moments.
The most effective and productive way to create wealth is through the operation of a free market, and every Conservative Member knows that to be the case. No matter how clever the bureaucrat or how sophisticated the Whitehall computer, they will never match the power of the market in ensuring that the goods that are produced are those that people actually want to buy. We have to extend the scope of the market, make sure that it works efficiently and make good any defects in its mechanism.
That has to be done by bringing the disciplines of the market into public purchasing, by encouraging wider share ownership and by privatisation — which Opposition Members hate so much. Privatisation proves beyond doubt the power of private enterprise in a competitive free market. In company after company privatisation has resulted in an enormous leap in efficiency, performance, attitudes and involvement. Some 350,000 employees now have a stake in their companies and millions of British people have also bought shares. That is true public ownership.

Mr. John Smith: No it is not.

Mr. Channon: Is it not true public ownership for the people to own shares in their companies? The Labour party wants public ownership to be the pseudo-social ownership espoused by them—their new fancy word for renationalisation. That will disfranchise millions of ordinary people who have bought shares—

Mr. John Prescott: And sold them.

Mr. Channon: Yes, but a great many have kept their shares. Under a Labour Government, there would be a return to Government interference, inefficiency, bad service and losses funded by the taxpayer.

Mr. Hickmet: Did my right hon. Friend notice the ludicrous proposal made by the hon. Member for Kingston upon Hull, East (Mr. Prescott) that we should use nationalised industries to increase employment? In fact, he said that in certain industries employment would be doubled. What effect does my right hon. Friend think that would have upon the efficiency of the coal industry, the British Steel Corporation, or the shipbuilding industry? The hon. Member for Kingston upon Hull, East was interviewed by the BBC on those matters.

Mr. Channon: The proposal of the hon. Member for Kingston upon Hull, East (Mr. Prescott) would clearly have a disastrous effect. I have learnt one lesson which I hope that my hon. Friend the Member for Glanford and Scunthorpe (Mr. Hickmet) has also learnt—

Mr. Prescott: He is paid to lie.

Mr. Hickmet: On a point of order, Mr. Deputy Speaker. The hon. Member for Kingston upon Hull, East (Mr. Prescott) has said that I am paid to lie. In my respectful submission, that comment should be withdrawn.

Mr. Deputy Speaker (Sir Paul Dean): If the hon. Member used that phrase, I am sure that he will wish to withdraw it.

Mr. Prescott: I clearly did use that phrase, Mr. Deputy Speaker, in reference to the hon. Member making a dishonest statement about what I said. I was referring to the man being briefed to make untrue statements, but I will withdraw the statement that he told a lie.

Mr. Channon: I will return to the facts of privatisation. I have another quotation from the hon. Member for Kingston upon Hull, North—

Mr. Prescott: Kingston upon Hull, East — the Minister must not blame my hon. Friend.

Mr. Channon: No, the hon. Member for Kingston upon Hull, North (Mr. McNamara) is far too sensible. I meant the hon. Member for Kingston upon Hull, East.
The facts of privatisation speak for themselves to everyone within and outside the House except the Opposition. We do not hear much from the Opposition about the performance of Jaguar. That company has increased its turnover three times, turning a loss of £30 million in 1981 into a profit of more than £120 million in 1985 and creating 1,500 new jobs. Had it remained in state ownership under a Labour Government, those 1,500 people might still be on the dole. The profits of Cable and Wireless are up fourfold and those of the National Freight Consortium, with 17,000 shareholders, are up sixfold since privatisation. British Aerospace has also done pretty well. It would not have done so well under the right hon. and learned Member for Monklands, East. Profits are now up to £80 million in that flourishing company under private ownership.
Those are the reasons why we are determined to press ahead with our privatisation programme — because it

works. I am delighted to reaffirm that in the course of next year British Airways, the British Airports Authority and Rolls-Royce will also take their rightful places in the private sector.

Mr. Franks: Before my right hon. Friend leaves the subject of privatisation, will he comment on the privatisation of Vickers Shipbuilding and Engineering Ltd., when 82 per cent. of the local work force bought shares, paying £1 per share in March for shares which now stand at £1·60, whereas Labour proposes to renationalise and give them worthless pieces of paper?

Mr. Prescott: That is another dishonest statement.

Mr. Channon: My hon. Friend is entirely right to point out the great success of VSEL, which has had an extremely important effect on employment in his area compared with the disastrous proposals that the Labour party would put into operation if it won a general election.
I shall now deal with the public sector, because it is not only in the private sector that things have to be changed. The right hon. and learned Member for Monklands, East criticised the fall in expenditure by the Department. I will tell him why that expenditure has fallen. In 1979, we had to provide more than £1 billion of taxpayers' money in external finance for expensive and inefficient DTI-sponsored nationalised industry. This year the figure will be £89 million compared with £1·2 billion — less than one twentieth, in real terms, of the amount that we had to find when we came to office.
After losing hundreds of millions of pounds per year in the 1970s, as my hon. Friend the Member for Glanford and Scunthorpe has pointed out, the British Steel Corporation made its first overall profit last year. Last week it announced a profit of nearly £70 million in the first half of this year. That is good news not just for the taxpayer, who had to finance the earlier losses, but for those who work in the industry. Steel producers throughout Europe and elsewhere have been engaged in a fight for survival. BSC has shown that it is a survivor. Its recovery still has a good way to go, but the Government's approach and the corporation's willingness to make that effort have given the work force a more promising future than it has had for a good many years. I very much doubt whether my hon. Friend the Member for Glanford and Scunthorpe needs any lessons in electoral strategy from the right hon. and learned Member for Monklands, East.
As well as in the nationalised and privatised sector, the Government have a role to play in the private sector in helping to improve both manufacturing and service industries by improving the working of the market. One way of doing that in which my right hon. and learned Friend the Paymaster General has been especially engaged is by getting Government off the backs of business and allowing firms to get on with the job rather than having a plethora of red tape and controls.

Mr. Prescott: Such as training.

Mr. Channon: I look forward to debating that with the hon. Gentleman. Although Government must avoid burdening business with unnecessary regulation, there are, of course, areas in which the Government have a duty to set and enforce the rules. One example is the financial services industry.
No regulatory system can entirely stamp out malpractice or fraud, but we are determined that there


should be vigorous enforcement of the Financial Services Act and I am confident that this will provide a sound statutory framework for self-regulation. Recent events have shown that it can operate rapidly and effectively, as can the Government. On the evening of Thursday 13 November we received a report from the stock exchange on its initial conclusions in a particular case. We considered that report and on Friday 14 November I brought into force the relevant provisions of the Act on insider dealing. I appointed inspectors on Saturday 15 November. That shows the seriousness with which we regard our commitment to enforcement and our determination, in particular, to tackle insider dealing with all the powers available to us under the Financial Services Act.
The United Kingdom continues to consolidate its position as one of the three main financial centres of the world. The merger between the stock exchange and the International Securities Regulatory Organisation is to be welcomed as a major step in ensuring that Britain keeps its place in that sector. If markets are to operate successfully, they must be both efficient and orderly. Consumers, whether of goods or of services, must be sure that they will not be ripped off. As we are debating the Queen's Speech as well as the Opposition amendment, I should briefly inform the House that tomorrow in another place we shall be introducing a consumer protection Bill.
The new legislation will significantly improve consumer protection in terms of product safety, price claims and bargain offers. It implements a Community directive on product liability and will ensure that consumers can secure compensation for personal injuries caused by defective products without, as at present, having to show that the producer was negligent. The Bill will also require suppliers to ensure the safety of all consumer goods, not just those covered by specific safety regulations. It will give consumers greater protection from misleading price indications such as bargain offers when there has been no real price reduction and hidden extras are added to the quoted price.
The Bill will protect consumers from particular abuses but will also ease trade within the Community through harmonised product liability laws. I believe that it will also provide a powerful impetus to manufacturers to improve the quality of their goods—my hon. Friend the Member for Stafford (Mr. Cash) stressed the importance of this—as the concept of safety in the Bill will encourage them to make greater use of standards.

Mr. Ken Eastham: Will the Minister give way?

Mr. Channon: We shall no doubt have many months of debate on this, but I will give way if the hon. Gentleman wishes.

Mr. Eastham: In considering the various protections advocated by the Government, will the Minister also consider the various aspects of protection for workers? One thinks especially of health and safety in factories in view of the considerable reduction in the number of inspectors. That is a great deficiency in an area that cannot be ignored.

Mr. Channon: The Bill will improve safety for workers in factories in some respects. If the hon. Gentleman will be good enough to await publication of the Bill, we can

deal with those matters in detail in later debates. As is the custom, however, I thought that in courtesy I should inform the House of the introduction of that legislation.
The right hon. and learned Member for Monklands, East wants me to deal with the question of trade. Under the Conservative Government we have had six years of trading surplus. Of course, we shall move into a temporary deficit next year. That is because the price of oil has dropped. It would be astonishing if that did not have a temporary effect on the balance of payments. My right hon. Friend the Chancellor set out the effect of that extremely clearly in his autumn statement. I have every confidence that we shall soon move back into surplus when the exchange rate and everything else has adapted to deal with the new circumstances. I have no qualms about the future course of the balance of payments. We must consider the balance of payments as a whole — manufacturing, oil, services and everything else.
I have tried very hard to increase our trading opportunities in the Community by completion of the internal market, which would be of major benefit to British industry, and, with my colleagues in other countries, by trying to launch a new round of trade negotiations at the General Agreement on Tariffs and Trade ministerial meeting in Uruguay. That is a major step to advance the prospects of world trade.
It is common ground that we need better access for exports of British goods and services. A genuine opening of markets to British goods in the newly industrialising countries, agreed rules for liberalising world trade and services, new rules for resolving disputes more quickly and satisfactorily, lower tariffs and better curbs to inhibit trade in counterfeit goods are important issues to people outside the House, whatever hon. Members may say.

Mr. Robert Atkins: I welcome my hon. Friend's generalised case, but we agree that import controls are no answer. Indeed, they are counter-productive. Leyland Vehicles has done everything that is required of it in terms of competitiveness, design and providing support—all the things that my right hon. Friend mentioned—but it is still up against predatory financing in Europe, the Third world and the far east, which makes it extremely difficult for that company to compete, although its product is perfectly adequate, if not good for the market. Will my right hon. Friend turn his attention to that—I know that he has in the past—and develop a policy which encourages support for our export contractors abroad?

Mr. Channon: I certainly will. We are especially anxious to try to help our exporters obtain major public business abroad. We now have a soft loan facility, and the consequential increase in the aid and trade provision budget will enable the amount of ATP-supported business to be doubled from £250 million to £500 million by 1989. Business worth £300 million in China and worth very nearly £150 million in Indonesia can be financed from the soft loan facility. My hon. Friend the Member for South Ribble (Mr. Atkins) has been very active pursuing the interests of companies in his constituency. I hope that the soft loan facility will put British companies in a strong position to win major business in those important markets.

Mr. Bruce Milian: Soft loans and ATP are of some significance to the shipbuilding industry, and discussions about that industry and support for it are


going on in the EEC. Will the right hon. Gentleman say something about that as the industry is in a critical condition?

Mr. Channon: I am glad that the right hon. Gentleman has raised that subject. I quite understand his anxiety about the Commission's proposals, which are being debated today by the Industry Council. I cannot comment on what is going on as matters might well be moving fast, but we accept that there is a need for movement from the Commission's original approach. We well understand the view of the House and believe that the 26 per cent. should be increased. The exact figure to which it should be increased will have to be considered. No doubt the right hon. Gentleman will table questions, or opportunities will be found to keep him informed. If he cares to table a question today or tomorrow, I am sure that my hon. Friend the Minister of State, Department of Trade and Industry, will be delighted to tell him the latest information.

Mr. John Smith: rose—

Mr. Channon: I have dealt with a great many of the issues raised by the right hon. and learned Gentleman, but I shall give way.

Mr. Smith: I had not realised that the Secretary of State had dealt with the balance of trade question. It is alarming that there is likely to be a £5 billion deficit in the balance of trade in manufactured goods by the end of 1986. What does the right hon. Gentleman think about that and what action will the Government take to correct it?

Mr. Channon: The right hon. and learned Gentleman always concentrates on one aspect of our trade and fails to relate it to the others. He knows very well, as my right hon. Friend the Chancellor made it quite clear in his autumn statement, what the likely outturn of the balance of payments next year will be—a small deficit.

Mr. Prescott: One and a half billion pounds.

Mr. Channon: Yes, £1·5 billion—after years of being billions of pounds in surplus. That is a record of which the Labour party should be jealous. I am sure that we shall return to surplus when the adaptation has taken place. It is ridiculous for hon. Members to imagine that the price of oil can slip from $35 a barrel to $8 a barrel without having any effect on the balance of payments of an oil producing country. The right hon. and learned Gentleman knows the arguments — he simply chooses not to put them to the House.

Mr. Hickmet: rose—

Mr. Channon: I must not give way to my hon. Friend. He has already had one or two goes today.
Since the Labour party had the Department of Trade and Industry under its control, we have indeed switched our expenditure. We have increased expenditure on science and technology support to £415 million—three times as much in cash terms and twice as much in real terms as when we came to office. That is a real re-ordering of priorities in the Department—away from loss-making nationalised industries to helping British industry. Science

and technology support represents an increasing proportion of my Department's budget—nearly one third this year, as opposed to a mere 6 per cent. when Labour left office.
The re-ordering of priorities has enabled us to fund programmes that did not exist in 1979, such as information technology awareness in schools, the Alvey programme into advanced information technology, international collaboration in Europe and the EUREKA project. All have been done because we have been able to alter our priorities and spend more on them and to waste less propping up nationalised industries, unlike the Labour party.

Mr. Prescott: Eureka!

Mr. Channon: Yes, indeed, EUREKA. The hon. Member laughs at EUREKA. If we are to prosper, we must have more collaboration with Europe, not less. I find it astonishing that Opposition Members should find that laughable.
We must have more foreign investment in Britain. Opposition Members are always difficult about that too. Support for inward investment since 1979 has created some 180,000 jobs, and we are now the third location in Europe for internationally mobile investment. We attract more than one third of all American and Japanese non-oil investment into the Community. That is good news for Britain.

Mr. Prescott: Why?

Mr. Channon: Inward investment creates jobs. Ford, for example, invested more than £1·5 billion in the United Kingdom during the past seven years, and provides jobs for some 50,000 people, and the hon. Member laughs.
The Government's policies are designed to help industry improve its competitiveness and win orders at home and abroad. Last week, the Confederation of British Industry published its manifesto. It also contained policy recommendations—

Mr. Prescott: Bare knuckles.

Mr. Channon: Not at all. It is articulating what the overwhelming mass of British business and everybody else believes. Everybody is in step except the Labour party, which believes that a return to profligate spending, high taxation, rampant inflation, state interference and militant trade unionism would not be a disaster for the country.

Mr. Prescott: What about training?

Mr. Channon: We hear the same old story over and again from the Labour party. The ad-men will dress it up. I expect that they will have a little brochure with a red rose on it. It will look very nice. There will be a few comfortable sounding euphemisms such as "social ownership" instead of renationalisation, but no amount of packaging will disguise it. Those policies would put us back at the bottom of the European league, which is where we were when Labour was last in office.
Every day, the Labour party seems to unveil another ludicrous proposal which would add to the costs and burdens on British industry. We had the great treat of the hon. Member for Knowsley, North (Mr. Howarth) arriving here this afternoon. Only last week, the hon. Member for Kingston upon Hull, East was at it again. On Monday, he announced his plan for a I per cent. levy on companies' turnover to finance industrial training. I am all


in favour of industrial training — [Interruption.] The Opposition also laugh at that. Investment in people is vital if companies are to succeed, and I am constantly urging companies to devote more resources to training. Many companies such as Jaguar and British Airways already are, but an indiscriminate tax on turnover that falls on every company irrespective of size or profit and loss is economic lunacy.

Mr. Prescott: rose—

Mr. Channon: I am longing to give way to the hon. Gentleman. It would cost ICI more than £100 million, and it might cost the existence of many smaller companies. The only guaranteed result would be a loss of jobs. Now I give way to the hon. Gentleman.

Mr. Prescott: I shall deal with training in detail when I reply. However, is the Secretary of State aware that Mr. Holland, a director of the MSC, has been looking at training and he recommended that a levy should be imposed collectively, in the region of 2 per cent. of turnover? He is a person with a great knowledge of training. Therefore, before dismissing the idea that 1 per cent. should he a minimum levy, the Government should look at what others are recommending.

Mr. Channon: Then may I take it that that remains Labour party policy? I was not clear from the intervention of the right hon. Member for, Sparkbrook (Mr. Hattersley) whether it was or not. Perhaps the hon. Gentleman will let us know.

Mr. Prescott: It is certainly the Labour party's policy to implement training levies and grants to deal with the collapse of training in industry. I said at Knowsley, North that we had not yet decided on the percentage—[HON. MEMBERS: "Oh."] I said that I believed that 1 per cent. was a minimum because according to the Manpower Services Commission most of our competitors are spending between 2 per cent. and 3 per cent. of turnover on training. Britain is lamentably behind in the training of its labour force.

Mr. Channon: We are making very good progress. One per cent. is now a minimum, and the hon. Gentleman quotes with approbation those who suggest 2 per cent. Are Opposition Members carrying the right hon. Member for Sparkbrook with them?

Mr. Prescott: Yes.

Mr. Channon: Really? It is noticeable that the right hon. Gentleman is not here, because he said:
The idea that there should be a 1 per cent. levy is not policy, it wasn't described as policy by John, and I can't imagine that it's going to be policy".
That is what the Opposition said on Friday, yet the hon. Member for Kingston upon Hull, East says something quite different today.

Mr. Prescott: The Secretary of State must accept what I said at Knowsley—that in my view 1 per cent. should be the minimum levy. I also made it clear that the Labour party had not made a decision about what the level should be. That is on the tapes and can be seen. In fact, I believe that the tapes were sent for, and they confirm that position.

Mr. Channon: It is very nice to know that it will be at least 1 per cent., because British industry can learn. As I have said, that sort of levy would cost ICI more than £100

million. Just think what it will cost other companies that are not making profits. Anyone who is a spokesman on employment, who puts forward such a ridiculous suggestion and who describes himself as interested in employment is talking nonsense.
Luckily, such crackpot schemes will not be put into practice. This Government's policies have helped to create the climate in which business is now flourishing. Prospects for the future are now brighter than for many years, and I urge the House to reject this ridiculous amendment.

Mr. Ian Wrigglesworth: Nothing that the Secretary of State said will be any consolation whatever to the 3 million unemployed who still remain in the country today, and we have every prospect of them still remaining unemployed for the next three or four years if the Government continue their policies.
It is a pity that in his description of the Government's record the Secretary of State did not quote the figures from 1979. Almost all the figures that he chose came from either 1983 or 1981 whereas, as the House will know, most of the disasters, particularly in manufacturing industry, took place from 1979 to 1981 when there was a high exchange rate, high interest rates and when companies were being made bankrupt and people were being made redundant throughout the country.
If one looks at almost any of the indicators that the Secretary of State mentioned, one finds that we are only just getting back to the 1979 levels of output in most areas of the economy. It is a great pity that the Secretary of State did not dwell more on the two fundamental problems that are facing the country.
The first is our competitiveness. Although he mentioned that, he did not go into adequate detail about how badly we are doing compared with our major overseas competitors or how the Government propose to deal with the problem. Secondly, the right hon. Gentleman did not deal with the fundamental question in the minds of all Opposition Members — the disastrous decline in manufacturing industry, which is inevitably giving rise to the vast balance of payments problems associated with manufactured goods.
In fact, the balance of payments surplus and the benefits of North sea oil have masked the decline in the manufacturing sector. Indeed, they have done worse, because the Government have allowed them to undermine the manufacturing sector of British industry. The Secretary of State is quite wrong if he thinks that Opposition Members are not concerned with the service sector or the financial services sector. He need only listen to the speeches of the members and leaders of the CBI to realise that there is no future for the financial services sector in this country or for the rest of the service sector without a more substantial manufacturing sector than we have today. If we are to redress the balance of payments problems that are coming fast down the track, we shall have to do something about the manufacturing sector.
The Secretary of State brushed off—as though it was only a minor problem on the horizon—the £1·5 billion deficit in our balance of payments in the forthcoming year. The alliance flagged this up in its budget proposals published in March, and the Secretary of State is incredibly complacent if he thinks that it is a mere blip on the horizon that does not signal a major problem facing our economy and industry.
For a start, it is an extremely modest forecast compared wth some of the other forecasts that have been made. The CBI put the deficit slightly higher at £1·6 billion; the London Business School forecast a deficit of £2·4 billion; and a number of City institutions, such as James Capel, talk of it being £3 billion or £3·5 billion.
As the Secretary of State said, a deficit is inevitable given the fall in the price of oil, but the trouble is that we do not have the manufacturing capacity to fill the gap arising from the decline in the sale of manufactured goods. The Government must address themselves to this fundamental and long-term problem which will continue into the future. Over the next few months the country may enjoy a short-term consumer boom, but goodness me, the brakes will have to be slammed on hard immediately after the general election, because the confetti money of a consumer boom will do nothing to overcome the problem of the balance of payments to which the right hon. Gentleman referred. Indeed, it will make the problem worse, because 70 per cent. of that consumer expenditure goes into imports.
The Government boost to public expenditure is long overdue. It is remarkable to look at the recent autumn statement, which was a full folder containing a sheaf of press releases. Why was it published when it was? The Chancellor of the Exchequer said that he was following precedent, but he was doing nothing of the sort. If my memory serves me correctly, last year's autumn statement was made on this very day—on the penultimate day of the debate on the Queen's Speech. It was accompanied by the printed tables that are now contained in the autumn statement that was rushed out last Wednesday.
There is only one reason why the autumn statement was published in the form of a sheaf of press releases. It was an attempt to pre-empt the debate on the economy, which had been tabled as a motion for the Thursday of the week before the Queen's Speech, and an attempt to boost the Government's general election image by portraying them as being high spending.
The Government have increased demand in the economy, but, as those balance of payments figures demonstrate, the demand is for microwaves, videos and other consumer goods which are flooding into the United Kingdom and creating jobs in Japan, America and Germany, but not in our manufacturing industry. Unless the Government are prepared to do something to overcome our lack of competitiveness, that tale will continue.

The Paymaster General and Minister for Employment (Mr. Kenneth Clarke): Do I take it that the hon. Gentleman is criticising the autumn statement? If so, which lines of expenditure would the alliance parties reduce, if they had the opportunity? In the light of reports his morning, is he still committed to the increase in borrowing of £3·5 billion on top of the present level to which I believe he committed himself at the SDP conference in the autumn?

Mr. Wrigglesworth: Yes, we remain committed to the borrowing levels to which we were committed. Once again, we shall publish our Budget proposals in the run-up to next year's Budget so that hon. Gentlemen can see exactly

the figures that we propose. We have done that consistently for the past two or three years and have had no hesitation in doing so—unlike the Labour party.
I shall come to the character of the demand that the Government are increasing in the economy shortly. But, first, the Government's forecast is that next year the level of unit labour costs will increase by only 2·5 per cent.— a decrease from 6 per cent. this year. I do not believe that and I do not think that anyone in industry believes it. How can that happen when pay increases at twice the rate of inflation are being agreed, when there is no sign of them moderating significantly and with all the prospects of greater pressure in the public sector for substantial pay increases? It is impossible for the Government to achieve that sort of target. It is sleight of hand to suggest that our unit labour costs will increase by only 2·5 per cent. in the forthcoming year. Competitiveness will not be improved, so the performance of our industry and commerce will be undermined.
The Government forecast inflation of some 3·75 per cent., but that is not what most commentators are forecasting for the forthcoming year and the year thereafter. That is a good reason why we shall not have the general election in 1988 or in October 1987. All the signs of these deteriorating forces on the economic front will by then be clear to the electorate. The speech by the Secretary of State today and the recent speeches by the Prime Minister and her Ministers show clearly that the Government are cutting and running for an early election before the economic squalls blow extremely hard. That is clear, if one looks at the underlying position of the economy.
We are now the 19th country in the world in terms of GDP per head of the population. We have been overtaken by Italy and we shall be overtaken by Spain in the early 1990s. We are gradually declining compared with other major countries and the events since the 1979 general election have only accelerated that trend. In three years' time we will still have an enormous quantity of unused capacity with more than 3 million people unemployed. Nothing that the Secretary of State has said today gives any reason to doubt that.
Despite the Secretary of State's protestations, the autumn statement shows that the Government are fundamentally anti-industry. Of the £7·5 billion that the Chancellor of the Exchequer showered on the economy, the trade and industry budget showed a paltry £60 million increase which is intended for additional research and development. Obviously, that is welcome, but the new plans for the next three years project a fall in spending of one fifth in real terms, confirming the plans on spending set out in earlier White Papers for a massive turnround in regional expenditure and support for industry generally.
One cannot recognise from the Secretary of State's description of Britain, the Britain of Newcastle, Glasgow, Liverpool, Sheffield or Teesside, where we have 22 per cent. unemployment. According to him, everything in the garden is rosy. There would be a hollow laugh from the people of Teeside if they heard his description of the economy. I see little hope of those people being satisfied in the near future by any substantial and sustained fall in unemployment.
The Government must take much more clear and effective action to revive manufacturing competitiveness. There need not have been any absolute decline in our industrial base as a result of squandering North sea oil


revenues, which have almost exactly met the additional cost of unemployment. While some deterioration in manufacturing competitiveness was inevitable because of the consequences on the balance of payments and exchange rate, it need not have been to the extent of the turnround of more than £22·5 billion, which will have taken place in the decade 1978 to 1987, even on the Chancellor's figures for next year's deficit.
The Government could have helped manufacturing industry and the whole business community, if they had followed the advice of the Confederation of British Industry and joined the exchange rate mechanism of the European monetary system. The Chancellor of the Exchequer, the Governor of the Bank of England and the Foreign Secretary are in favour of that, but only one person—the Prime Minister—is opposed to it. For some years the whole of manufacturing industry has been asking for that. Why has industry been asking for it, and why have we been advocating it? It would bring a greater degree of stability to the exchange rate and provide greater certainty for our industries which must sell overseas in difficult competitive circumstances. It would also help to reduce the premium that we must have on our interest rates, which are crippling large sections of manufacturing industry.
Our interest rates are at record levels. They are 4 per cent. above the average level of interest rates in the European Community. We hear a great deal about our difficulty in competing with Japan because of interest rates, but never mind Japan—every British business has an overhead of 4 per cent. on its borrowings in competing in Europe.
It would not necessarily be possible dramatically to reduce interest rates merely by joining the EMS. At times, we would have higher interest rates to protect the pound and we accept that. It is not an easy option, but it would bring about greater stability, not only in the British, but in the world monetary markets.

Dr. Michael Clark: Will the hon. Gentleman estimate what interest rates might be if, God forbid, there were alliance control after the general election and an alliance Government borrowed a further £4 billion? How would that affect interest rates? Would the position be better or worse?

Mr. Wrigglesworth: It is a bit rich for Conservative Members to lecture us on the lack of prudence in our budgeting because the proposals that we have published in our Budget statements in previous years are not much out of line with what the Government are doing now.
This year, the Government have increased public spending by £7·5 billion. For six years, Ministers have been saying that that was not possible and that it would be dreadful to do so because it would lead to an enormous increase in inflation. Now all the targets and indicators on monetary policy have gone out of the window. A reason why many forecasts show that inflation will increase in the coming months and next year is—

Dr. Michael Clark: rose—

Mr. Wrigglesworth: If the hon. Gentleman will listen to my response, he will have a reply. Inflation will increase because we have had a 140 per cent. increase in consumer credit in the past year. M3 and M0, the indicators of the money supply, have been racing ahead and that is why the

Chancellor has jettisoned them as indicators of monetary policy, and seems also to have jettisoned any hope of keeping control of the money supply or even looking at the monetary indicators, which he should do.
Our proposals are still within the constraints that are necessary to be able to sustain the level of inflation that we have forecast in our published figures. Our public expenditure figures will be published in the run-up to the Budget next year, when we have done our assessment of the economy for 1987 in advance of the Budget, in the same way as the Government.

Dr. Michael Clark: How will it affect interest rates?

Mr. Wrigglesworth: It will not affect interest rags any more than the crowding out of selling British Telecom or British Gas shares, or any of the other means that the Government have used to reduce the requirement to sell gilts. If the hon. Gentleman is suggesting that by increasing public sector borrowing one thereby increases interest rates, where is the evidence of the Government's policy to demonstrate that that has happened? It has not happened. There is no reason why it should happen, provided that one is clear that we are maintaining the targets that we would have to maintain within the EMS and joining the exchange rate mechanism to be able to do so. I see no difficulty on that, and we have published all the figures that follow from the increased borrowing in our Budget statement, published in March this year.

Dr. Michael Clark: The hon. Gentleman has not said that there will be no increase in interest rates, but I think that that is what he is trying to say. He mentioned the £7·5 billion increase in Government spending under this Administration — his figure. Is he saying that, in the event of the alliance having any authority after the next election, it will cut the extra £7·5 billion that the Government have recently brought in and replace it with £5 billion or £4 billion of extra spending, so that in that way, there will be no increase in the interest rate? In other words, will the alliance chop the amount that we are spending to keep interest rates stable?

Mr. Wrigglesworth: No, I was not saying that. We shall carry on, as we have said that we shall, steadily and modestly increasing public expenditure over the lifetime of our Parliament. The Government have said that they want to increase public expenditure by 1·75 per cent. a year. We have said that we shall increase it at a rate of 2 per cent. a year. That means that in the fifth year, public expenditure will be increased by £10 billion. There is no reason why that scale of increase in expenditure should increase interest rates.
As I said earlier — this is the reply to the hon. Member for Rochford (Dr. Clark)—if we join the EMS, over the long term there is no question that although at times it might have to lead to an increase in interest rates, we would be able to reduce the level of interest rates—which is our intention and hope—because we would not have to pay the sort of premium that the Government are paying because they lack the willingness to join the EMS.

Mr. David Penhaligon: My hon. Friend and I regularly attend Treasury Question Time, which clearly the occupants of the Government Front Bench do not. Does my hon. Friend agree that the Chancellor no longer argues that he has to maintain the interest rate regime that he is imposing because of the Government's deficit, but


simply to defend the international value of the pound? There is little connection within limits, with the Government's debt requirement and the interest rate regime that is being imposed.

Mr. Wrigglesworth: There is no doubt, as I said earlier, that the level of interest rate that industry is having to pay has been related to the market's assessment of the pound and the underlying performance of the British economy. That has led to us paying a 4 per cent. premium—that is, 4 per cent. above the average—on the interest rates of our European competitors. That is the judgment of the market on the weakness of the British economy. If there is any problem on the future of oil prices, there could be a grave problem, not only in this respect, but in others, for the British economy which have not yet surfaced. If the price of oil should either fall or not rise above its present level, there will be enormous pressures on the Government to change their economic stance.

Mr. Kenneth Clarke: The hon. Member for Truro (Mr. Penhaligon) made a point to the hon. Member for Stockton, South (Mr. Wrigglesworth). I have in front of me reports of the Liberal party's annual conference, in which the hon. Gentleman took part, and the policy to which its members committed themselves. It says:
The necessary increase in public spending nationally would be £5 billion a year and would need the support of an incomes policy.
Will the hon. Gentleman compare that with his statement of a £10 billion increase over five years, which he claims is a carefully considered and costed alliance policy? What is the position? Is none of it affected by the increase in spending announced in the autumn statement which, to my astonishment, the hon. Gentleman seemed to be criticising?

Mr. Wrigglesworth: I am not criticising it. I was pointing out that the autumn statement shows that the Government seem to have learnt some lessons from the alliance, which we welcome. However, we are determined to keep a tight rein on public expenditure proposals that emanate from the alliance, which is why we are scrutinising all the proposals that alliance spokesmen and others are proposing to ensure that they are kept within reasonable constraints.
Unlike either the Conservative party in opposition or the Labour party in opposition, we have had the honesty to produce not only all the public expenditure figures but all the figures on exchange rates, interest rates and all the other consequences of pursuing the policies that we think should be pursued. That led The Daily Telegraph among other papers to congratulate the alliance on producing "model Opposition economic statements". The right hon. and learned Gentleman cannot criticise us for trying to cover up the public expenditure proposals or the consequences of our proposals.
The Government's approach to industry has been undermined by their unwillingness to declare a clear strategy for the manufacturing sector. We should like to see much more going into research and development and science budgets. I am pleased that the Secretary of State has been able to increase that this year. This is the seed corn for the future.
A great deal more needs to be done by Government, working in partnership with industry. The Government

should not tell industry what to do, nor should they draw back and say that industry and business must get on and do their own thing and that Government have no role. The reality is that Governments must, and do, have a role in all our competitor countries. The phrase that we use to describe what we believe should be the right approach to business and industry is that the Government must work with the grain of the market. They must make up market deficiencies. The Government should do that by seeking to assist industry, but they should not tell industry what it should be doing. There are various ways in which one can do that, and I do not have time to go into all of them, but that is the approach that the Department of Trade and Industry should adopt towards industry to ensure that we overcome our lack of competitiveness and the great gaps in our manufacturing sector.
The Government should be developing a comprehensive system of education and training that brings together all the services in existence. When the Government came into office they were violently antagonistic towards the training boards and decided that they would abolish them. They were the awful quangos that at that time were very much out of fashion on the Government Benches, although they are not so much out of fashion now. New ones have been set up on Teesside. Quangos are not so unpopular now as they used to be. The Government set out to abolish the industrial training boards, but those that are left are doing a very good job.
The Manpower Services Commission, the technical colleges and various other bodies are involved in training and education. Their work needs to be dovetailed to provide a modular system of training so that gradually qualifications and certificates of qualification can be obtained which will be of value to people in their future careers. A youth training scheme that stands alone, with no qualification at the end of it, is no use. Young people need to take with them something which they can use as an aid to gaining further qualifications. The Government intend to move in this direction. I urge them to move rapidly in that direction so that at the end of two years young people will be provided with a certificate that will be of value to them throughout their working lives.

Mr. Holt: Does the hon. Gentleman agree that we should start the process in the schools and not wait until young people enter training at 16? Does he agree that qualifications should be borne in mind before children leave school?

Mr. Wrigglesworth: I agree with the hon. Gentleman that work done in schools must be relevant to the needs of industry.

Mr. Holt: rose—

Mr. Wrigglesworth: We must ensure that a comprehensive system of training and education is built up that can be used on a modular basis, so that even those who are aged 30 or 40 can obtain modules or credits and build up qualifications should they want to change course and branch out in a new direction. That is vital to the longterm interests of British industry. The only way in which we can succeed against the competition from Japan, Hong, Kong, Taiwan, the United States, Germany and France is to build up high-level skills and qualifications and to increase industrial productivity.

Mr. Holt: Will the hon. Gentleman give way?

Mr. Wrigglesworth: No, I have already given way on many occasions.
We agreed with the proposal to change the basis upon which regional aid is calculated, but the amount spent on the regions has been cut by half. The Government are planning further real cuts of the same magnitude by the end of the decade. When unemployment is at record levels on Teesside, Tyneside and in Scotland and Wales, the last thing that the Government should be doing is cutting regional aid. The Government must provide more regional aid.
Apart from handouts from Whitehall and Westminster, enterprise could be encouraged in the regions by devolving all the work that is involved in developing economic and industrial activity. A powerful case can be made for establishing development agencies, similar to the Scottish Development Agency and the Highlands and Islands Development Board, in the north-east, the north-west, the midlands and the south-west. The regions understand their own problems and opportunities. Devolution to the people there would benefit the regions. Regional development agencies would do a far more effective job.
Industry has been for far too long the political football of the Conservative party and the Labour party. Unless we are able to remove industry from the grip of this outdated, ideological battle which has taken place for far too long over the body of British industry, we shall never be able to provide an environment in which industry and business can thrive. Major areas of British industry — for example, steel, telecommunications and gas—have been the subject of party political debate for far too long. They are not the subject of party political debate in other countries. If such worthless and irrelevant dogma is injected into the debate about our industrial future, industry will never thrive as it should.
The key to breaking the grip of these two old ideological dinosaurs who are fighting over the body of British industry is the introduction of proportional representation. Too many right hon. and hon. Members are willing to try to reform other institutions, but they are never willing to try to reform or to improve the way in which government works. Fundamental reform of this House of Commons is needed. Fundamental reform of the way in which government operates is also needed to make it more representative of the majority of industrialists and business people who have no time for the nonsense of party politics and for the grip that it has held for too long on industrial policy. The sooner radical change in the form of government takes place and the sooner politics is taken off the back of business, the sooner business will be able to thrive.

Several hon. Members: rose—

Mr. Deputy Speaker (Mr. Harold Walker): Order. I remind the House that Mr. Speaker has asked for brief speeches.

Mr. Michael Heseltine: I am glad that the right hon. and learned Member for Monklands, East (Mr. Smith) is back in his place. Those of us who have studied industrial policy for some time were amused by his reference to the need for reappraisal of the airbus. I remember all too well that during the 1960s the then Labour Government pulled out of Airbus. In order to

protect its long-term technological base, Hawker Siddeley decided to invest private sector money in the project in order to keep Britain within the European consortium. However, Hawker Siddeley was nationalised for its pains by a subsequent Labour Government. That is an excellent example of the industrial and economic problems that have beset British industry.
It is all very well for the Social Democratic party to refer naively to removing the industrial debate from the political spectrum. However, that is at the heart of our concepts of ownership, the private sector and the great divisions between the Socialist influence and the capitalist influence. It is naive to believe that there is any way in which these issues can be removed from public debate. The hon. Member for Stockton, South (Mr. Wrigglesworth) would have a great deal more credibility, as would his party, had we seen a little more of the steel to which he now refers when he was a member of a Government who were happy to nationalise industry and to inject all these uncertainties.
Perhaps the most significant thing that happened last week was the overwhelming call by the Confederation of British Industry for the Government to adopt an industrial strategy. That our largest companies should have committed themselves to what only five years ago would have seemed an attitude of inconceivable intervention says something about the attitude of British industry to the position it now faces and to its realisation of the threat that is before it and against which it does not perceive that it can win, except in the concept of partnership with Government. It is fundamentally important that the leaders of British industry should have set a pace which demands a reappraisal of the view of Government towards their relationship with industry.
We have all indulged — I as much as anyone — in party trading of statistics to suit the side of the House on which we sit. But the decline of Britain's industrial base is not measured in the lifetime of this Government or of the previous one. Britain's industrial base has been declining relatively for most of this century. If one considers the statistics that matter — the share of the world's manufactured trade which Britain enjoys — they show that relentlessly, regardless of which Government are in power and regardless of policies and economic regimes, there has been a persistent decline in our share of world trade in manufactures.
I agree with many of the points made by my right hon. Friend the Secretary of State for Trade and Industry. The Government can claim great credit for the significant improvements in the effectiveness of our capitalist economy. The privatisation programme has moved an entire sector of the industrial economy back into the trading market place, where it can seek to secure for the nation new opportunities in a more competitive environment. The competitiveness and productivity gains were essential. They were forced upon us and the Government earn great credit for the courage with which they have stood up to the pressures and allowed the market place to impose disciplines upon us which we had long since avoided.
I have no doubt that the incentives which have been introduced for the starting up of small businesses are one of the most significant long-term innovations for which the Government's industrial strategy is responsible. Would that, as a nation, 20 or 30 years ago, when world trade was


expanding and when the economies of the West were job-hungry, we had applied the same initiatives and energy to stimulating small industrial start-ups, and diversified our economy from industries which we protected and cosseted and sought to ensure did not face the increasing world problems.
Low inflation is a hard-won prize. Who can doubt the agony of the Chancellor of the Exchequer as he sees all the sacrifices which the Government have imposed upon the economy to bring down inflation now being frittered away because the private sector is indulging in the traditional British disease of paying ourselves what we cannot afford? Pay settlements of 8 or 9 per cent. when inflation is running at 3 per cent. bear no relationship to the competitive thrust that the competition of tomorrow will impose upon us. The Government are entitled to explain to the nation vigorously that it is not their example but that of the private sector that is leading tomorrow's inflationary spiral.
Who can seriously doubt, especially the Labour party which first began to raise the need to bring unions within the law of the land, that the Government's courage in doing that has been a watershed in industrial relations?

Mr. Prescott: Nonsense.

Mr. Heseltine: The hon. Gentleman says, "Nonsense," but he will remember that it was the document "In Place of Strife" that first published a Government view that the unions had to be brought within the climate to which the entire trading economy must be adapted.
All those advances have revealed to me just how much further there is to go. Our competitors have not stood still while we have been making those advances. There is no realistic escape from the anxiety depicted by the Chancellor's recent forecast for the balance of trade next year. That, coupled with the fact that, for the fourth year in a row, real-term interest rates are at a record level, is the test of the judgment of the international money markets about the prospects of the British economy. One cannot escape from that. If we need to pay those rates of interest, someone is making a judgment about how we perform. That means that we must perform better and go further in the directions in which we have marched, and not go more slowly and backwards.
I shall say something about some—not all and not even in order of priority—of the uncomfortable issues which must still be confronted. The process of reinvigorating and pushing forward our industrial excellence must start with Government. A far more significant role must be given to the Department of Trade and Industry. As someone who has served with great pride in two recent Conservative Administrations, I know beyond peradventure that the all-pervading influence in society which dominates public expenditure and political priorities is the ethos of the Treasury. In industrial terms, and oversimplifying the position, it is the ethos that would arise if the financial directors of an industrial company were put in charge. The books would be properly kept, but that is not a formula for flourishing enterprise.
The Department of Trade and Industry should not he armed with powers to compel, direct or take over those who disagree with it. No capitalist economy operates in that way. Other capitalist economies ensure that owner, banker, manager and worker operate in a common

endeavour to make their companies excellent and their products competitive. There is an attitude of partnership within companies, but there is also an attitude of partnership between Government and the companies. There is no absolute way in which those objectives are achieved. No formula can be taken from one or other of our capitalist competitors. There is no precise measurement or common model, but there is a common theme which depends upon an instinct of national interest. In the creation of wealth, manufacturing interest requires medium to long-term stability, not short-term financial gains.
The need to expose industry to the rigours of the market cannot be in question among Conservative Members. Japan, Germany and America are capitalist and competitive, but their capitalism exposes their companies to competition while at the same time using the resources and the influence of Government to enhance the market places to which those capitalist companies have access. Those Governments do not try to do the job of industrialists, nor do they pretend for one moment that industrialists can do their job without the help of Government. In Britain, we have failed, uniquely, to achieve an ethos where wealth creation through industry was a political priority, driving, not subsequent upon, other priorities. No capitalist economy can flourish unless the share owners, the managers and the workers in a company recognise a common purpose over the longer term in the company of which they are all partners.
As long as the Treasury dominates the Government's relationship with the owners, the bankers and the institutions of the City of London on the one hand, and the Department of Trade and Industry conducts a separate disalogue with managers on the other, the single-mindedness that is achieved by other capitalist economies will be missing. The failure of communication is not simply that between owner and manager. The standard of communication within British companies between managers and workers is simply not up to that of our international competitors. We waste significant parts of our most precious national resource — our skilled workers—because they do not feel sufficiently involved in the long-term success of the companies for which they work. For as long as I can remember, the CBI has urged its members to improve the standard of communication between the managers and the workpeople. Our best companies are the equal of any in the world, but the standards of the average are inadequate and those of the worst are abysmal.
I could not be more supportive of the procedures whereby we have brought the unions within the law of the land. It was an essential first step, but it was a negative step. It created an opportunity and I wish that the Government, in the Queen's Speech, had proposed a legally backed code of conduct and practice for the proper dialogue between managers and work people.
In any dialogue between the Government and industry, we must come to grips— everybody has said it for as long as I can remember—with the separate cultures of the public and the private sectors. The training of civil servants and the interchange between the complementary public and private sectors is, frankly, woefully inadequate. We cannot leave the career management of civil servants as offshore islands of the Treasury and the Cabinet Office. That is one of the most vital parts of stimulating the relationship between the public and private sectors. All the


language that has gone on since Fulton is as though it had never been, because the culture separation today is as profound as it has been throughout the whole of that time. Until it changes, there will not be that sense of urgency within the public sector upon which the private sector depends.
My next priority has to be the educational system. It is an extraordinary and indefensible phenomenon that 3·25 million people in our society are out of work, yet in industry there are jobs galore for people who do not have the skills to fill the jobs. It is no good the shadow spokesman telling us that that is something to do with the Government. Most of the people who lack the skills and training went through the educational system when the previous Government were in power. It simply debases the currency and urgency of the situation to try to pretend that that is something—

Mr. Prescott: rose—

Mr. Heseltine: Forgive me. The hon. Member for Stockton, South (Mr. Wrigglesworth) kept the House for half an hour and I do not want to copy that example. The hon. Member for Kingston upon Hull, East (Mr. Prescott) will have one of the great privileges of half an hour of his own in which, if he wishes, to harangue the House at the end of the debate. I am sure that he will do it with his customary energy and, no doubt, his customary lack of intellectual commitment.
The essence of the dilemma about the quality of our educational system is precisely the dilemma that my right hon. Friend the Secretary of State for Education and Science faces today. Where are the Opposition coming from? They talk about the need for an industrial strategy and training the youth and then undermine all the Government's arguments when they are trying to obtain an educational system that depends upon quality as opposed to the cash input. If ever there was an argument and an example of how throwing money at a public problem does not solve it, it is in the proposal to just spew large sums of additional cash over the educational system.
We must be sure that authority is delegated to the headmasters and the headmistresses. We must make schools publish their standards and monitor those standards and push accountability back to local communities, including industrial communities. In other words, we must insist upon the educational system delivering the skills that industry needs, for which the jobs of tomorrow will be available.

Mr. J. F. Pawsey: Before my right hon. Friend leaves that point, will he say a word about the comments of our right hon. Friend the Secretary of State for Education and Science on city technology colleges and the importance of bringing education into line with industry? Does he agree that the 20 CTCs that will be established are a positive step forward?

Mr. Heseltine: I wholly support the CTCs. They are exactly rightly targeted and, if I may take a historic view, they will do something to undo the damage of the social engineering that took the grammar schools out of the city centres. [Interruption.] Not content to harangue us for half an hour at half past 9, the hon. Member for Kingston upon Hull, East is now haranguing us from a sedentary position. If I explain my reluctance to give way to the hon. Gentleman it is because in the end I am a democrat and

there are no Labour party supporters here but there are a large number of Conservatives. So much for the bleeding hearts that are so concerned about our unemployment. Where are they?
When I listen to the Social Democrats—did I say Social Democrats? I withdraw the inaccuracy: Social Democrat, alone upon the Benches, supported by one member of the Liberal party—I know that the reality of the care and concern of the parties in opposition is to be seen, not in the devastation of British industry, about which they talk, but in the devastation of British democracy.
If my party can conduct the debate in which we alone are apparently interested today, I wish to go on to the next subject which I believe needs a new thrust and initiative — the research and development programmes of the Government. Those programmes are scattered around Government Departments with no common set of disciplines or scrutiny. The Department of Trade and Industry—I believed this when I was Secretary of State for Defence—should be given a co-ordinating role to be sure that our scientific, technical and engineering resources in the public sector are not dissipated where there is no economic or industrial payback.
It is of the highest priority where we have such limited resources, increasing though they may be, that there should be budgets and time scales and payback in order to be sure that the wealth-creating process is given the priority upon which we depend.
We must also appraise the influences behind the disposition of the nation's savings. I want to mention just three, and I realise the political sensitivity of just one of them —mortgage tax relief, the tax-free income that is given to the pension funds and the privileges available to publicly quoted companies to buy up provincial businesses within a deferred tax regime.
I do not believe that it would be right or fair to withdraw mortgage tax relief from those who currently enjoy it and there is a considerable argument for maintaining it, particularly for first-time buyers. But in the priorities of tomorrow, as we look ahead, I wonder whether there is a better use of public money in the industrial challenge that we face and whether we would not be right over a period to phase out that form of subsidy in order to have released to us the opportunities and the resources to deal with the wealth-creating imperatives that we confront.
The fact is that our society does not operate within one free market economy. There are huge subsidies at work. The best part of £10 billion a year—one form of hidden subsidy after another presided over by the Treasury under all Governments—is redistributed in the way that I have outlined.
That has the consequence of drawing the nation's savings south and of concentrating the investment of much of those savings in non-wealth-creating activities. The centralisation of power that is a consequence of such a process is debilitating to the strength of industrial, and therefore, of provincial Britain.
We have—all Governments have—tried to counter those trends. We spent £600 million on regional policy. We spent £600 million on urban policy. But those subsidies are not commensurate to the scale of the subsidies which the Treasury provides, which have a countervailing effect.
Finally, I want to address before the House the scale of the industrial challenge that we in Britain will face


tomorrow. High technology industries in the United States of America enjoy virtually total protection. They are supported at the frontiers of their capability by American taxpayers. The space, defence and strategic defence initiative programmes push America's capital excellence to the frontiers of human capability and skill and they are on a scale that Britain can never begin to contemplate equalling or matching.
Behind the rigorously applied protection on which Congress insists, those companies are in a position then to move into the market places of the world and to compete, not just in military terms, but with all the civil adaptations which that initial taxpayer funding created.
The Japanese economy is arguably even more protected than the American economy and it is much more heavily concentrated in the civil field. A study of how Japanese industrial excellence has penetrated American markets shows that it is, if anything, a bigger threat to the market places upon which our society depends.
The sums of money provided by the taxpayers of those two countries push their industrial excellence to the uttermost extreme, which presents a daunting threat to the peoples of western Europe. We can only address those imbalances if Europe co-ordinates itself into a single market, with a single law and a single competitive base, and if we pool the scarce research resources that are available to us. I welcome the almost visionary plan that Lord Cockfield has masterminded. The need to implement that plan by 1992 must be at the forefront of our industrial strategy, and I welcome the commitment of my right hon. Friend the Secretary of State to it.
In no way do I suggest that my list of priorities is exhaustive. Many more priorities could be added in our determination to provide a wealth-creating industrial ethos in this country. But I believe that that list addresses some of the central and long-standing difficulties that have beset our economy for decades, and not just during the lifetime of one Government or regime. The assumption that manufacturing industry faces a bleak futute or that tomorrow will be dominated by service employment is too simple. Someone will produce the things that we need. The danger is that it will be someone else.

Several Hon. Members: rose—

Mr. Deputy Speaker: Order. I remind the House that overlong speeches are made only at the expense of the rights of other hon. Members.

Mr. Ron Leighton: The House always pays great attention to the speeches of the right hon. Member for Henley (Mr. Heseltine), and did so again tonight. He may have made one or two partisan points, but perhaps that was done to ingratiate himself once again with his party. However, I hope to touch on some of his remarks.
The hallmark of this Government, their chief product, and the memorial that they will leave behind as their legacy to the next, and for which they will be mainly remembered, is the relentless growth of mass unemployment. That is their main achievement and the main consequence of the Thatcher years. They will go down in history as the Government who crippled British manufacturing industry and brought chronic mass unemployment, quite

unnecessarily, back to this country, with all the waste, inequality, misery and hardship that that means. It is an appalling record of hopeless mismanagement and a crime against this country.
In 1979, when unemployment was one third of its present level and had been steadily falling for two years, the Conservatives said that Labour was not working. Their election manifesto of that year promised more genuine new jobs, and the first Queen's Speech in 1979 did the same. That was the promise. Were ever a Government more mendacious? Was ever a prospectus more fraudulent? Has ever a failure been more utter and complete? Millions of our people have paid with their jobs for that failure. British manufacturing output is less now than it was seven years ago, in 1979, while every other industrialised country has raced ahead.
Manufacturing investment is still 17 per cent. less than in 1979, and our manufacturing trade balance has moved from a surplus of £2·7 billion in 1979 to a deficit now of more than £7 billion. Instead of a leaner, fitter economy, we have been left with an emaciated skeleton. Vast areas of industrial Britain have been laid waste. It is the worst disaster that Britain has suffered in peacetime, and it is continually getting worse. There is no end to this carnage. Every day brings worse news. Thousands of manufacturing jobs are being added to the dole queues every month.
At one time we were told by the Government's economic witch doctors that the way to end unemployment was to reduce inflation, that reducing inflation would be painful in the short term, but that it would provide the solution. We do not hear that now. Short-term pain has led only to long-term pain. Now that inflation is down, unemployment is at an all-time high—worse and longer lasting than in the 1930s. Even the fall in inflation owes little to Government policy. It is due to the fall in world commodity prices. Inflation has fallen everywhere, and much further in the other industrialised countries. Our inflation is still points ahead of theirs, with the loss of competitiveness that that means.
Faced with this appalling record, and knowing that they must soon meet their maker at an election, the Government twist and wriggle. They fiddle the figures. They alter the way that statistics are compiled, massaging the figures downwards each time. That has been done 18 times since the Conservatives came to power. Perhaps it is legitimate to make some adjustments in the way that the figures are collected, but not every month, because they then lack all credibility or honesty, and make it impossible to obtain a clear picture of trends.
Perhaps the Government think that if they keep on redefining the jobless they will redefine them out of existence by the next election. Certainly one group that will not lose their jobs are the statisticians, who constantly revise the figures downwards so that we are no longer comparing like with like. Another growth area involves the 1,500 extra staff taken on to put the unemployed through an inquisition by demanding to know whether, within 24 hours, they will get on their bikes, leave their home towns and accept poverty wages elsewhere. That is something of which the Paymaster General should be ashamed. Employment Ministers should be the champions of the unemployed, and their voice in Government. Instead, they are harassing, persecuting and hounding the unemployed. Hit squads of bounty hunters are being sent round the country to shake people off the register.
It is not the availability of the jobless for work that is the problem, but the availability of work for the jobless. The Government's view is that if the dole queues cannot be reduced by providing work, they will reduce them by fiddling the figures, and by intimidating and frightening people away from applying for benefit. To suggest that we have unemployment because the workshy will not walk round the corner to available work is to insult those whom the Government have injured.
In my constituency, 3,342 people have been interviewed by Restart but only 24 have been placed in jobs. That is a fraction of 1 per cent. The Government's approach to unemployment is one of conjuring tricks, mirrors and sleight of hand to give the illusion that unemployment is falling. Apart from those bullied off the register, the other factors at present are the expansion of the community programme and the second year of YTS. As a result of them, the headline totals will be reduced. The only "jobs" being created at the moment, are part-time, low-paid jobs that do not offer employment protection, holiday pay, sick pay or pension rights, and that are mainly taken by women.
Simultaneously, thousands of full-time jobs are still being destroyed month in, month out. Moreover, as many of those "jobs" are only for a few hours a week, sometimes in the evening, they are often second jobs, which results in double counting. The 1984 labour force survey revealed that 450,000 people had second jobs, and that 250,000 people were self-employed in second jobs. the survey showed that that practice was growing.
The Government's wriggling reaches an extreme when, after all their failures, they try to take the subject off the agenda altogether. At the time of Beveridge, the then Government said that they accepted responsibility for the maintenance of a high and stable level of employment. That was the contract between Government and people in the post-war settlement. This Government have now reneged and given up on that. They say that it has nothing to do with them, that they are only the Government. They say that Governments have little influence and that everything is beyond their control, so we should not blame them. Of course, they did not say that at election time, but that is what they are saying now. Like Pontius Pilate they have washed their hands of the matter.
That retreat is a terrible abdication. It is treason for democratic politicians. They say that Governments do not create jobs; customers do. But who is the customer for roads, drainage, or hospitals and the equipment that goes into them, or for schools and the furniture and books that go into them? It is the community collectively, with the Government as their agent. As the Government rein back public expenditure on those vital services, at the diktat of a bizarre monetarist dogma, they not only impoverish our society but cause unemployment. Spending is spending. It is grotesque nonsense to pretend that private spending is always meritorious and virtuous whilst public spending is not. Often, particularly when those essential services are provided publicly, the reverse is true.
Here we can put our finger on one of the main ways in which the Government are causing unemployment. As all advanced industrialised countries become richer — this was the point made by the Secretary of State—the number of those employed in manufacturing gently floats downwards, while the number of those employed in the services, such as health, education and personal social services gently floats upwards. One process complements

and compensates for the other, maintaining an equilibrium of stable employment. That is what happened in Britain in the decade before 1979.
From 1966 to 1974 employment in manufacturing decreased by 8 per cent., while it increased in personal services by 25 per cent. From 1974 to 1979 employment in manufacturing decreased by 8 per cent. while it increased by exactly 8 per cent. in personal services, but from 1979 to 1985 employment in manufacturing collapsed by 25 per cent. whereas in personal services it increased by only 1 per cent. Since 1979 there has been a violent collapse of employment in manufacturing with no adequate compensatory increase in services. We elect, rightly in my view, to provide these services publicly, and this makes them vulnerable to Government cuts. The Government have caused unemployment by engineering the collapse of British industry and by reining back expenditure on, and therefore employment in, our public services.
The National Health Service is a good example. The Office of Health Economics sent us a booklet recently that gives us the facts. It tells us that in 1960 Britain was one of the nine largest spenders on health care, but we are now the smallest spender among the western developed countries in terms of percentage and of national wealth. The OHE tells us that over the past six years relative spending in the United Kingdom has fallen behind the OECD as well as the European average by as much as 25 per cent. annually. Countries such as the United States of America, Sweden, West Germany, the Netherlands and France all spend very much more than we do in absolute terms and as a percentage of gross domestic product.
Further evidence comes from Eurostat, which is the statistical office of the EEC. It gives figures for what it terms social protection, which is social security, health provision, housing and social services. As a percentage of GDP, Britain is at the very bottom of the EEC league table. This means that the Government have unnaturally and perversely reduced the growth in employment that we would have had in these services. Their main effort now is the privatisation of auxiliary services, and this merely leads to fewer people being employed and dirty hospitals. This hostile and wrong-headed approach to our great public services deprives our people of the standards that they desire and is one of the causes of unemployment.
My second point is directed to a subject to which the right hon. Member for Henley addressed himself. The other main area in which the Government's delinquency is causing unemployment is British industry. The Government adopt the same philosophy and accept no responsibility. They say that it is nothing to do with them and that everything is to be left to market forces. If large swathes of British industry disappear, they show no concern. Yet that lack of concern and inaction is responsible for the growth of unemployment. As the Government stood back, doubtless muttering monetarist catchphrases, 1·7 million jobs were lost in manufacturing between June 1979 and June 1983. A quarter of British manufacturing industry was destroyed in three years. That appalling fact alone would justify driving the Government from office.
The collapse of manufacturing pushes the rest of the economy into decline. If fewer goods are made, less transport is needed to move them and less steel is needed, and so the list continues. As the Government stood back complacently, the healthy surplus in trade in manufactures which they inherited was transformed into a frightening


deficit, for the first time since the days of the Tudors. Only the foreign exchange that is earned by North sea oil temporarily disguises the disaster.
I agree with the right hon. Member for Henley that unemployment cannot be tackled without an industrial policy, which is what the country is crying out for. The Government's blindness and ideological obstinacy is suicidal for Britain. Perhaps there are historical reasons for these attitudes. Perhaps business and politics have been kept at arm's length because the first industrial revolution that happened in Britain took place spontaneously, as it were, and was independent of Government support. At that time Governments were probably largely unaware of the changes that were taking place. Perhaps the tradition of non-intervention stems from that period.
That is in sharp contrast to our industrial competitors such as Germany and France and, even more so now, Japan. In these countries, which were often seeking consciously to emulate Britain's industrialisation, there was Government involvement and initiative from the beginning. We might recall that Bismarck's Prussian railway system was publicly owned from the start. It used German-made rails and rolling stock that were ordered from the developing iron and steel industries of the Ruhr. A comprehensive system of vocational training was introduced and the banking system was developed to provide long-term finance to domestic industry.
This has all been brought to a fine art in Japan, where there is no nonsense of a hands-off attitude. The MITI, the Ministry for International Trade and Industry, directs and guides industrial development and the assault on world markets like a military operation. When Japan decided to create a motor car industry, it produced 2 million cars in the first year. What is happening to the British motor industry by contrast? It was once a major world supplier, but we now buy over 60 per cent. of the motor cars for our domestic market from abroad. If we cannot make motor cars, what are we to make and how are we to earn our living? Hundreds of thousands of jobs have been lost in the motor industry, and many more have been lost because of the knock-on effects in the steel industry, in tyre producing plants and in the industry that produces and supplies spare parts.

Mr. Andrew Rowe: Is it not a strange fact that fits ill with the hon. Gentleman's argument that Jaguar, now that it is a private company, is creating jobs, and that the motor car industry, which has been in public ownership for a long time and throughout the whole of the decline in employment, is struggling to emulate Jaguar's example?

Mr. Leighton: I welcome Jaguar's success, but I think that the hon. Gentleman will find that the progress of Jaguar was dependent upon the injection of public money in the past. Jaguar was the successful part of Leyland and it was privatised.
Do the Government care about what is happening to the motor car industry? Do they have a view? Do they accept any responsibility for whether we have a motor car industry? Are they willing to see it go the way of the motor cycle industry, the typewritter industry and others, and disappear altogether? Do they not realise that that attitude is the mother and father of unemployment?
I demand a Government who will take responsibility. Our domestic producer, Austin-Rover, has under 20 per cent. of our own market, and recently the Government tried to sell it off to the Americans. Can anyone imagine the American Government, or people allowing their motor car industry to fall into foreign and possibly hostile hands? No other country in the world would take that view. We must have a Government who take responsibility on behalf of the whole people, in the national interest, for employment and industry.
There is a great divide between the modern Conservative and Labour parties. The Conservative party believes that unemployment is a force of nature like the weather, or the plagues of the middle ages, which Governments cannot and should not try to do anything about, but we are in politics because we believe that these forces must be brought under democratic control and subordinated to the needs of flesh and blood. That is the main purpose of democratic politics in modern times. I remind the House that the plagues were brought under control by collective effort. Likewise, it is possible to end the waste of lives and resources and bring an end to the social divisions that are caused by the plague of mass unemployment. All that would be possible if we willed it and showed the necessary imagination, intelligence and determination.
This will be done when we have a Government who shoulder the responsibility gladly and make it their chief aim of policy, and subordinate all else to that end. It will be done by a Government who mobilise the energy of the people behind a proper industrial strategy which achieves the necessary investment and research and development and initiate a thorough-going training programme. We must have a Government who will create the wealth to fund the expansion of our great public services so that we can be proud, and not ashamed, of our schools, hospitals and social services, and the employment that they will create. Of course this can be done, and we should make a start now. We must lift the curse of unemployment from our people. If this Government, who now have the support of only a third of the electorate, are not willing to do that, they should make way for those who are.

Mr. Esmond Bulmer: I believe that the Queen's Speech will be welcomed by industry because it is consistent and short of measures that it will have to assimilate. I believe also that industry welcomes the progress that has been made since 1979. Unlike the right hon. and learned Member for Monklands, East (Mr. Smith), it has not forgotten the winter of discontent. It has taken great satisfaction in the Government's success in controlling inflation and introducing a framework of industrial relations law that has done much to improve our competitiveness.
If we are to be really competitive, we must abandon the annual fix, the wage round. If the Labour party were to bring itself to think more in terms of profit share and merit increases, and if it were really serious about creating new jobs, it would join us in going down that road.
I believe that industry welcomes the Government's promotion of free trade and the success of the last GATT round. My right hon. Friend needs to be rather more robust in his approach to the Japanese. The position about


whisky is a crying scandal and the Government are under no illusions about how industry feels about the need to join the European monetary system.
Industry welcomes the promotion of a free market, the abolition of pay, dividend and exchange controls, the privatisation programme, and the moves to wider share ownership. This evening, I should like to explore the limits that the Government are prepared to put on the operation of market forces. Marx described the drive to monopoly as the Achilles' heel of capitalism and we have seen a huge growth in takeovers. In 1983 they were worth £2·3 billion, in 1985 the figure was £7 billion and for the first six months of 1986 it is £8·4 billion. It is hardly healthy to see many large companies preferring to trade in other companies rather than developing their research programmes and producing new products.
Those takeovers that produce the quickest returns are in the same product area, confer price leadership and lead to a rapid reduction in excess capacity. Some of these takeovers may fall foul of the Monopolies and Mergers Commission, but the majority will not because they are carried through for diversification. Usually, they involve a degree of asset stripping and sometimes they are an ego trip for individuals. Of course, some are desirable because they are sleeping giants which need to be stirred, but the analysis carried out by Professor Franks at the London Business School of nearly 3,000 companies involved in takeovers over 30 years, showed that, measured as a combination of share price movement and dividend payments, the return was lower than before.
That is one of the criticisms that can be levelled, but another is what the fear of a takeover does to the management of companies, the extent to which it leads managements to cut research and development because they fear that if they make a sizeable investment the costs incurred will cause their profits to dip and that is when the bid will come in. That short-term problem must be addressed. The position will be made worse by the changes now occurring in the City of London. Clearly, many American hankers have creative ideas about how to break up a number of large companies and of course, the fees are enormous. Argyll had to pay £30 million for its effort to take over Distillers. If a large American tobacco company had wished to take over Distillers, could the Government, in the light of their experience with British Leyland, have stood hack?
I wonder how far my right hon. Friend has thought about what he will do if in the coming months a series of British household names come under attack as a result of the massive new sums of money that will now flow into the City of London. We have some sort of failsafe mechanism for dealing with works of art, but as far as I can see we have no such mechanism for our major companies. It is hard to believe that either the French or the Japanese would allow a significant company to pass into foreign ownership. Another fear is that takeovers are often unhealthy in that they are too highly geared. The fear of the junk bond syndrome is real and it was the reason for my right hon. Friend referring the bid by John Elliott for Allied to the Monopolies and Mergers Commission.
I have another fear about the mismatch between the power of the manufacturer and the retailer. Under British law, two manufacturers seen talking together and with 3 per cent. of the market could find themselves in real trouble, even though the retailer has 30 per cent. of the market. The concentration of buying power is forcing out

many medium-sized companies and if my right hon. Friend examines the figures he will see that such companies are disappearing at an alarming rate.
The remedies do not all lie with Government. As David Walker of the Bank of England reminded the CBI conference, who is it that puts pressure on pension funds to perform? Often it is the company which complains that its future is in the hands of 25-year-old fund managers. Clearly, there is a need for companies to talk more often and more freely to their institutional shareholders and to establish that most elusive of goals, the sustainable growth rate. In Japan, lower returns are accepted because the Japanese put growth first and those low returns are accepted because there is no capital gains tax and the return comes in that way. I hope that my right hon. Friend the Chancellor of the Exchequer will consider that argument.
The Government have accepted the need to look at these problems again and are engaged in a review of competition strategy. They will need to define the market, and I hope that they will accept the concept of regional monopoly. That is especially important when one considers the role of television, because television companies have monopolies. If a manufacturer wishes to produce a new product and sell it through two retailers with 30, 40 or 50 per cent. of the market and those retailers will not give clearance for such a new product, the product cannot be launched.
On another level, some large companies might wish to compete on a continental or even a global basis and there are strong arguments for allowing them to grow to the point where they can compete in world markets. I think there is sympathy in Whitehall for this, but Brussels must not be forgotten and increasingly, competition strategy may be orchestrated from there.
Large businesses can pose a substantial threat to small businesses. That has long been recognised in the United States where there is a system of law designed to
prevent powerful business combinations from driving out of business the small dealers and worthy men whose lives have been spent therein".
That was how the Surpreme Court put it.
I hope that, in his review of competition strategy, my right hon. Friend will consider some of the arguments put to him, especially those advanced by Dr. Anderman, a professor of law, who is an expert in American anti-trust legislation. His advice is that British competition policy should be reformed to include explicit support for small business. There should be more opportunities for individual firms affected by infringements of competition laws to take the initiative to enforce such laws by private actions, and the rules of competition should be more clearly defined.
The Government will be wary of too close definition, which may prejudice the pragmatic approach. Having accepted that there is a case to be answered, let us hope that a way can be found through a difficult series of judgments that will facilitate the growth of companies that can play a global role, especially in the fast-growing market in the Pacific; that will provide companies with clearer guidelines on what will and what will not be permissible; that will define product and market areas more clearly; that will offer greater protection for small businesses from the abuse of power by larger companies; and that will recognise that market forces that are allowed to operate in a way that puts the short term above the long


term can be deeply destructive of our best interests. If my right hon. Friend can find his way through this minefield, he will deserve the thanks of us all.

Mr. Ken Eastham: I found the speech by the hon. Member for Wyre Forest (Mr. Bulmer) extremely interesting and a little stimulating. He seemed to be expressing a panic felt in business circles because of firms being taken over. That is the sort of thing from which Opposition Members have suffered for several years, because we have seen many takeovers which resulted in people in industry losing their jobs. Now we are seeing a new dimension, because foreign money is coming into Britain and a new group of people are in panic in case they are displaced from their jobs in big business and management. I hope that hon. Members will take seriously the speeches made in the debate and some of the speeches that we make from time to time in which we make passionate appeals for consideration by the Government.
I was employed in manufacturing. Few hon. Members come from manufacturing industries. By and large, we have solicitors, barristers, accountants, writers and journalists, but hon. Members who have worked in manufacturing are thin on the ground. One of my hon. Friends, who is the oldest Member in the House, often said to me that most hon. Members have never made a mousetrap in their lives. I understand his sentiments.
I draw the attention of the House to a deputation on behalf of GEC Manchester which met hon. Members today in one of the upper Committee Rooms. I worked in manufacturing for that company when it employed 25,000 people, but it is now doubtful that even 4,000 people work there. That lobby told us that the final thrust of redundancies was about to take place. It seems to be the fag end of turbine manufacturing in GEC Manchester.
I should not like the House to think that I am making a special plea only because of the position of GEC Manchester. It would be unfair not to recognise that the same crisis is occurring in NEI in the north-east. My hon. Friend the Member for Gateshead, East (Mr. Conlan) has raised the problems of the power industry in an Adjournment debate and my hon. Friend the Member for Jarrow (Mr. Dixon) has referred to it also. I cannot emphasise enough to Ministers that the power industry is facing a crisis because of a lack of orders. That problem is not due in any way to inefficiency, bad work or late deliveries. Indeed, the power companies have competed successfully abroad. But sometimes foreign orders dry up. If we are to continue to have a British power industry, it is essential that the Government assist.

Mr. Nicholas Winterton: I hope that the hon. Gentleman will not be inconsistent. It is my understanding that both companies are involved in the construction of nuclear power stations. How would the hon. Gentleman equate his remarks about appealing for Government assistance with the fact that his party is apparently against the development and building of nuclear power stations, which feature prominently in the construction of both companies?

Mr. Eastham: I am sorry that the hon. Gentleman misunderstands the power industry. I am thinking of turbines, and it does not matter whether the fuel is

conventional, fossil or nuclear. I hope that on this occasion we shall not deceive the House by going down that road. Electricity generation depends on large turbines and the heat source does not matter. I am addressing my remarks to the power industry—namely, the production of turbines. The Secretary of State made great reference to nationalised industries. I am referring to private companies—they are not failures—which face the same crises suffered by even the nationalised industries which people attack from time to time.
Only a few years ago the Government said that they intended to set up a new power station every year for 10 years—10 new power stations.

Mr. Bernard Conlan: Nuclear.

Mr. Eastham: My hon. Friend says, "Nuclear." Whether nuclear or conventional, we have now had more than seven years of Conservative government and they have not yet placed one order for a power station.
The Government have no excuse. All the experts recognise that in the 1990s we shall face an energy crisis. The present power stations will be decommissioned and replacements are required. It can take up to seven years to construct a new power station. It is imperative that this major decision be taken now. The Government cannot rely on the excuse that they are waiting for the outcome of the Sizewell inquiry. It is recognised that fossil fuel as well as nuclear power stations are to be built. I assure the House that the heat source chosen makes no difference—the power stations are still required, and the Government have a duty to the nation to place the orders for them now. It is a scandal, and even crazy, that Britain is importing energy from France. Cables supplying power equivalent to that produced by two power stations are bringing electricity from France. France runs its electricity generation system at a massive deficit. It appears that we are buying French electricity to offset some of France's losses and, possibly, to balance their trade. At the same time, we are destroying our power industry.
It is crazy that Britain has the capacity, skill and resources to build power stations, but, even with that information staring the Government in the face, they still will not place orders for new power stations. The Government should place two orders this very week, not next year or after the general election. I may be wasting my time appealing to the Secretary of State. He may say that he is responsible for the Department of Trade and Industry and that employment is not his worry. But we are all responsible. The Cabinet is jointly responsible in the major issue of power generation.
Power stations could he helped in other ways during this crisis — for example, in small measure through refurbishment. Rotors and blades are urgently needed in some power stations. Those are some aspects where deficiencies could be made up until some orders get rolling again. It is a tragedy that the deputation which I met should have to tell us that there is no future for them in the power industry.

Mr. Peter Thurnham: As someone who has spent many years working in the turbine manufacturing industry, I obviously feel strongly about the hon. Gentleman's points. If he is dissatisfied with the way in which decisions are made in the electricity industry, as presently constituted, does he suggest that it would be better privatised?

Mr. Eastham: I am nonplussed by those remarks. The two largest manufacturing companies involved in power generation in Britain are privately owned. I do not understand the question. The customer, in the main, is the Government. When we talk about power stations, we are talking about billions of pounds. Therefore, it cannot be left to a small company or some board to say that it is prepared to buy a power station. It is beyond that. The dimension and scale of a power station depends on a Government making the decision.
I would be grateful if, for once, the Minister during his reply could find time at least to comment on the power industry and give some hope to the skilled men who are now losing their jobs through no fault of their own.
The Secretary of State mentioned how the economy was picking up. He said that everything was rosy. However, he did not mention mass unemployment. Things are not rosy at all. Unemployment is creating poverty in the major cities on a scale that has not been seen since the industrial revolution. I have a document which refers to poverty in Manchester. It refers to an area adjacent to GEC Manchester at Trafford Park. I am not talking about Greater Manchester or the 10 districts, but about one small area.
The document says:
unemployment has increased from 11 per cent. in 1978 to a staggering 24 per cent. in 1985 … half of all Manchester residents are having to live below the poverty line … In October 1985, 45,700 residents were unemployed, that's 25 per cent. of Manchester's workforce … 43 per cent. of those are under 20 years of age and 37 per cent. of those aged 20 to 24 are unemployed.
In all honesty, the Minister cannot stand at the Dispatch Box and tell us that everything is rosy in Britain when one can see the misery, poverty and unemployment in the city that I represent. I know that my city is not alone. The problems are the same in the north-east, in Scotland and in Northern Ireland. It is one catalogue of events after another. I denounce and refuse to accept the statement that everything is so successful under this Government. In fact, it has been a disaster.
I remember the debate about Westland helicopters earlier this year. Hon. Members spoke about the bright future during that debate. I was particularly interested and took part. I was involved because, being an engineer, I have a special concern for the men on the shop floor. Unfortunately, the debate seemed to dwell on the trouble and difficulties of the Prime Minister and the resignation of two Cabinet Ministers. Other than my speech, very few people even mentioned the Westland helicopter engineers.
At that time, the management was soothing the workers and telling them that their jobs were assured. However, I can now tell the House on good authority that there are already serious closures in the experimental department. That means that there will be a loss of design capability. Until now, Britain has led the way in rotor head design for helicopters. We will not be the leaders if design and research are being cut. We will be dominated by America, as some of us felt at the time. It will be a screwdriver job. Westland will no longer have the initiative, drive and expertise to compete in the making of helicopters.
The Government have their greedy eyes on Rolls-Royce. They are waiting like vultures to take over. I can assure the Minister and the House that it gives the workers of Rolls-Royce no confidence to think that the company may be privatised. The Government think that the solution to everything is selling off and privatising. We

should remind ourselves that Rolls-Royce was privately owned. It suddenly went into a crisis and had to be nationalised—not by a Labour Government but by a Conservative Government. Within a matter of days, that Government had to introduce legislation. They could not afford to allow the company to go under, so it was nationalised. It is now making handsome profits and is successful nobody can deny that. Because of that, the Government now think that it is timely to do the plunder job. They want to plunder the assets and take the profits, as if there was something clever about it. It is a disaster. I can assure the House that the work force recognises the dangers. If Rolls-Royce is privatised, hundreds, possibly thousands, of workers know that they will lose their jobs.
I am a Member of the Select Committee on Employment. A month ago, we visited Japan. We learned much from that visit. Both sides of the Committee recognise the great difference in the attitude to man management. For instance, there was far less brutalisation. The management was concerned about the work force and wanted there to be jobs. The management wanted the workers to share in the prosperity. That is the sort of thing we do not see. If one wants any proof of that, there is adequate documentation of the visit and there are hon. Members in the Chamber who witnessed some of the interviews that took place. There is far more co-operation between the Japanese Government, management and work force. There is also higher investment and twice as much research. That is why Japan has been so successful.
We went to a small company and spoke to a man who called himself a small employer. He employed 82 people. If Britain continues on its present course, that will soon be a big employer in this country. He told us that he could afford to buy a new robot which cost £250,000. He borrowed the money from the bank at a rate of interest of 4⅛ per cent. In Britain, the rate of interest would probably have been about 16 per cent. or 18 per cent. Is it any wonder that Britain cannot compete? The fact that we cannot compete with other countries is not due to a failure of the workers.
When the Government have been in office for nearly eight years, it is a great tragedy that they have learnt no lessons whatsoever. They can send people abroad who come back with all the facts. They can go and see the successful companies and recognise how they were successful, but they still refuse to learn the lesson. Not much has been said about this. At the moment we are faced with the prospect of a massive balance of payments crisis. That crisis is looming now, and the Government know it. Unless they jump and run quick for a general election, that crisis will be on their shoulders. Only politicians and the economists recognise how serious the matter is, yet the Government, again, are still ignoring the lessons. They think that it is far more satisfactory to have people on the dole, producing nothing and earning nothing, rather than doing productive work.
I conclude with a sincere and passionate plea. I wish that the Government would seriously take on board my remarks about the power industry. For goodness' sake, do not let us wait until after the Sizewell inquiry. The two new power stations could save the day. That is my plea.

Sir Ian Gilmour: I entirely agree with the hon. Member for Manchester, Blackley (Mr. Eastham) that unemployment is still desperately


serious, but I should like to begin by being the first speaker in the debate to congratulate the Government on the recent fall in unemployment. This is the first occasion in the past five or six years, when I have been making speeches on the economy, that unemployment is not higher than it was the previous time that I spoke.

Dr. Norman A. Godman: May I correct the right hon. Gentleman in one regard? Unemployment in Scotland continues to grow, and that was acknowledged by the Secretary of State for Scotland in a speech that he made in my constituency but two weeks ago.

Sir Ian Gilmour: I am sorry to hear that. In fact, I did know it, but I was talking about the overall figure. The hon. Gentleman will agree that it has gone down.
Some critics have claimed that the recent fall in unemployment is the result of the Government fiddling the figures again. The hon. Member for Newham, North-East (Mr. Leighton) said that today. I do not believe that such claims are true. Many of the new jobs may not be so-called "real jobs", but I have always advocated an extension of the special employment schemes, so I am far from complaining about that. People employed in youth training and other special schemes are doing useful jobs for the community and themselves.
I have always thought that market forces would need much help from the Government, and they are now beginning to get it. I also welcome the Government's change of heart over demand management, otherwise known as reflation. I would not use the term "U-turn" because that would he indelicate, but clearly there has been a change. As with unemployment, I have always believed that market forces would need help if adequate overall growth were to be achieved. There are now reasonable signs that the Government are set to adopt a more expansionary fiscal stance.
Again, as over the unemployment figures, there are those who believe that the change in policy represents a mere electoral conversion and that the Government will revert to their previous policy after the election. I do not believe that at all. I am sure that it is not true, but if it were, it would constitute a strong argument for more frequent elections. More frequent elections would be a great benefit to the Labour party because it could fight an election on its present crazy defence policy and so on, get beaten, start again, and possibly hope to get something better. However, I do not believe that more frequent elections would help the alliance because it already changes its policies more than once a year, so more frequent elections would not make any difference.
While I welcome the Government's new flexibility, I am, like a number of my right hon. and hon. Friends, worried by the continued absence of an overall economic strategy. We all know that for growth to be enough to bring down unemployment and to be sustainable in the long term, it has to be more than the growth in productivity and there has to be balance between the various components of demand. Investment, particularly in manufacturing industry, must rise at least as fast as output, and exports must rise as fast as imports. As we know, that has not happened since 1979. Overall growth

has been so slow as to cause a rise in unemployment of about 2 million. The component parts of that growth have been disturbingly unbalanced.
Practically all the rise in domestic demand since 1979 has taken the form of public and personal consumption, particularly consumption of consumer durables, which has risen no less than 30 per cent. on the strength of the credit explosion. Yet output of manufactures, even after its recent welcome rise, which my right hon. Friend the Secretary of State spoke about today, is still 4 or 5 per cent. lower than in 1979. So, more than the entire rise since 1979 in British demand for manufactured goods has come from imports, which have risen by nearly 40 per cent. As if that were not enough, investment in manufactures, so crucial if we are to be able to build for the future, is currently falling. In the third quarter of this year it was no less than 22 per cent. lower than in 1979.
The very high level of interest rates must have been partly responsible for that fall in investment. If I can make a short digression: it has become rather difficult to characterise the Government's monetary policy or to know exactly or even approximately what it is. Once upon a time, monetary policy was measured by the growth of the so-called monetary aggregates. By that criterion, monetary policy has been extremely expansionary as most of the monetary aggregates have been going up by between 12 and 20 per cent. over the past year. That does not—except to one or two people — herald a large rise in inflation. The huge growth in the money supply is simply the consequence of a huge increase in lending, mainly to households. In the year to June 1986 net lending to the personal sector reached a staggering total of £29·3 billion. a sum equal to some 12 per cent. of total personal disposable income, and 26 per cent. up on the previous year.
It is a remarkable paradox that, by the monetarist criterion, monetary policy has been extremely slack, while by the interest rate criterion, monetary policy has been extremely tight. So, if we take everything together, the effect of monetary policy on the increased demand has been almost wholly perverse, stimulating consumption and restricting investment.
Meanwhile the balance of trade in manufactures has deteriorated by over £10 billion, driving the current account into substantial deficit in the third quarter of 1986. It is structural deteriorations of that sort that should now be a cause for very serious concern. I am afraid that I do not think that the Government's attitude to the situation is defensible. Dangerous and deeply entrenched structural declines require strategic thinking and planning.
The Treasury is now forecasting a current account deficit of about £1·5 billion next year, although that is only a little more than occurred in the third quarter of 1986 taken by itself. Many independent forecasters think that it will be more than that, and I am inclined to agree with them. But even if the deficit is only £1·5 billion next year, it will be a great deal larger the following year. The prospect at present is that it will continue to get progressively larger in following years, at least so long as the growth of output continues. Of course, if it does not continue, there will be a large increase in unemployment again. The decline in oil production and the trends in trade in manufactures will ensure, by one route or another, that we enter a new era of economic decline possibly combined with renewed inflation. That was the conclusion of the Aldington report a year ago, which has not been


adequately answered either by the Chancellor of the Exchequer or by the Treasury in their evidence or reply to the Select Committee.
There have been several suggestions on how the situation should be dealt with. I have put forward some before, but that would be another speech, which I shall not make now. What is needed is such support for British manufacturing industry, whatever form it takes, to enable —or force—it to be competitive in world markets.
There is, therefore, a great deal of consolation for the Opposition and the alliance in the fact that they are going to lose the next election. There will be a nasty crisis in the next Parliament and the opposition parties can count themselves lucky that not they but my right hon. Friends will he dealing with it. It will be a difficult and unpleasant task. Instead of waiting for that crisis to arrive, I hope that my right hon. Friends are taking steps to prevent it. Unfortunately, there are no signs of them doing that at present, but I hope that before long we will see such signs.

Mr. James Lamond: This has been an extremely interesting debate. I wish first strongly to associate myself with the remarks made by my hon. Friend the Member for Manchester, Blackley (Mr. Eastham), and especially those about the turbine manufacturing industry. Like my hon. Friend, I was an engineer before I came to this House. I am honoured to say that I am sponsored by the Amalgamated Engineering Union Technical, Administrative and Supervisory Section. Many hundreds of our members are involved in the turbine industry. As the Government procrastinate month after month and year after year, they should remember that, when the day comes when they decide to place the orders or instruct the orders to be placed, the skills and ability to manufacture the turbines may have disappeared. They cannot be retained for ever if no orders come in to sustain them.
Another interesting contribution to the debate came from the right hon. Member for Henley (Mr. Heseltine), who told us about his views—some of which differed fairly radically from the points made by the Secretary of State. Getting a little away from the subject of today's debate, the right hon. Gentleman spoke about mortgage interest tax relief. It was interesting to note that he believes that that is, perhaps, taking far too big a proportion of the amount of money available for public spending. Although the right hon. Gentleman was careful to hedge around what he proposed should be done, I wonder whether he put this and the other views that he expressed this afternoon in Cabinet? We shall never know. It would be interesting to know whether the Cabinet seriously discussed his point about mortgage interest tax relief and whether and why it rejected his proposal.
I want to remind the House of the time, some years ago now, when there was a Labour Government and the Prime Minister was Leader of the Opposition. I clearly recall her attacks on the Labour Government. She suggested that anything the Labour Government did to try to increase employment was not creating real jobs. She used to cry for real jobs. In fact, she used to call out, "Not real jobs," from a sedentary position when we were doing our best to create employment.
I do not know exactly what the hon. Lady meant by "real jobs". However, I cannot believe that, if she were sitting on the Opposition Benches today, she would have

allowed the many different schemes put forward by this Government, in an attempt to mop up young people off the unemployment register through the Restart programmes and so on, to come within her definition of real jobs. Nor can the Opposition accept the Government's cry now that all that they can do is create an environment in which jobs can be created by industry. The right hon. Lady placed the blame for unemployment fairly and squarely on the shoulders of the Labour Government. Those of us who have been Members for some time can remember the campaign of 1979 and the well-known posters—which have already been referred to — which stated that "Labour isn't working". The posters claimed "Labour isn't working", not "Industry isn't working". Apparently the Government were at fault if there was unemployment then, but now the Government wash their hands and say that they can do very little about unemployment.
I do not want to detain the House for very long. It is only a week or so since I spoke about unemployment in my constituency. The employed and unemployed people in Oldham do not recognise the Britain that was described so touchingly by the Secretary of State today. He said that everything in the garden was lovely—investment was increasing; employment was increasing and new businesses were starting up all over the place. That was the picture that the Secretary of State painted.

Mr. Nicholas Winterton: indicated assent.

Mr. Lamond: I am astonished that an hon. Member from the north-west who is deeply involved in the textile industry should be nodding and suggesting that, for once, he supports his own Front Bench. I cannot believe that the hon. Gentleman thinks that that is the picture in the north-west.
In my area we rely heavily on manufacturing industry, but the number of people unemployed is increasing all the time. The number of job vacancies is something like one for every 24 people who are unemployed. It is not a matter of these people lying in bed all day, not looking for work or having to be sent for and asked if they are making a real effort to find work. Of course those people want work, but there is no work in that area.
The Minister attempted to defend the questionnaire, which urges the unemployed to move, as a simple effort to comply with the law as it has always stood. The problem is how can the law and the regulations be applied. Are they applied with compassion or absolutely ruthlessly?
In order to drive down the number of people registered as unemployed—not the number of unemployed but the number registered as unemployed, which is different — and so to save the face of the chairman of the Conservative party who I think has a position in Government—

Mr. Kenneth Clarke: My right hon. Friend is the Chancellor of the Duchy of Lancaster.

Mr. Lamond: Yes, he is the Chancellor of the Duchy of Lancaster. I am sure that he is well paid for that job, although I do not know how much time he devotes to it.
However, the Government are trying to save the right hon. Gentleman's face because he said that if unemployment is not below 3 million by the next election, the Tory Government are not worth re-electing. Of course, we agree with him. Even if unemployment is below


3 million, the Conservative Government are not worth reelecting. In order to reach that figure, the Government have applied the new questionnaire absolutely ruthlessly.
Let us suppose that one of my constituents wishes to move to London. I have met such people and I have tried to help them get jobs as bus drivers and so on, but the Minister's Department does not help. The Department denied my constituents a grant to move to London and allowed it only after I had made representations.
However, putting that aside, let us assume that one of my constituents has found a job and has received assistance to get to London. Can anyone imagine how difficult it is to find rented council accommodation in London? If my constituent wanted to buy even the most modest accommodation, can any hon. Member believe that he would find somewhere to house his wife or family within 10 miles of London for under £75,000? That would be pretty difficult. My constituent's home in Oldham—which might be quite comfortable—may be valued at £25,000. If he sells his home and buys one at £75,000, he will have an enormous mortgage around his neck.
It is economically impossible for my constituents to move even if there are jobs available in London. My constituents do not understand where is the wonderful booming Britain that Ministers continually describe.
Efforts are being made in Oldham to provide more work in the area. The Secretary of State for the Environment made an extraordinary attack on local authorities in yesterday's debate. He seemed to think that every Labour councillor in the land was some kind of devil, albeit a democratically elected devil, determined to drive all employers out of the local authority area. That is completely untrue. Oldham metropolitan borough has made great efforts through its industrial development unit to attract industry to the area. Of course there has been an enormous rundown in manufacturing industry. The textile industry has been almost ground into the dust. I do not suggest that that process began in 1979, because it began many years earlier, but with the limited resources available the local council has done its best to encourage new industry in the area.
My hon. Friend the Member for Blackley cited the example of Rolls-Royce, which was saved for the nation by a nationalisation measure pushed through the House, as I recall, in a matter of hours. A large firm in Oldham — Ferranti — was also in dire financial trouble and would have gone to the wall with the loss of 5,000 jobs in and around Oldham, not to mention the impact on other areas of high unemployment, but for the intervention of the National Enterprise Board. I wonder how many Conservative Members remember the NEB.

Mr. Eric Forth: The what?

Mr. Lamond: The hon. Gentleman may not wish to recall it, but the 5,000 employees of Ferranti in Oldham are happy to recall it, because without the intervention of the NEB in taking up the shareholding and providing the necessary cash flow to save the firm, their jobs would have disappeared. Having been given a breathing space and, in my view, better management, that firm has gone from strength to strength. It is now expanding and those jobs are much more secure. The Conservative Government, of course, abolished the NEB and sold the shares at a profit. Without the intervention of the NEB, unemployment in

my constituency would be far worse today. The Minister should remember that any Government can intervene positively to assist employment in areas such as Oldham.
Oldham council has also intervened positively and successfully. A multi-million pound scheme is now almost finalised for the installation of a new print plant on a site in the Hollinwood area vacated by Ferranti when it moved out of heavy engineering. Oldham council has succeeded in attracting new industry. Instead of attacking local government on every possible occasion, as exemplified by the attitude of the Secretary of State for the Environment who is supposed to be responsible for encouraging local government, the Government should recognise the great value to be obtained in assisting local government to bring new industry to these areas.
The new plant at Hollinwood is not an isolated example. The success of the Labour-controlled council in Oldham—Labour has a substantial majority with 43 councillors out of 60—was used by the Tories in a party political broadcast as an example of how effective local government could be in attracting new industry to an area. Labour councillors in Oldham are determined to ensure that as many jobs as possible come to Oldham, but they are struggling against the odds. Council leader John Battye has said:
like other local authorities in Mrs. Thatcher's Britain, Oldham has had to learn to be commercially hard-nosed about such deals—
with firms attracted into the area—
since there is precious little practical assistance from Whitehall these days.
The Minister should take that to heart and examine closely how he can encourage local authorities to be his agents in attracting industry to their areas, especially to areas such as Oldham which have been hit so hard by the decline of manufacturing industry. Many thousands of people in Oldham are out of work—three times as many as when the Government came to office.
I shall not go into all the things that the Secretary of State forgot to mention in his rosy picture. For some reason, the highest interest rates ever are now being inflicted on this country. I shall not dwell on that, although it must surely be a measure of the outside world's confidence in Britain and its economy, save to say that people look to the Government, whether it be a Labour or a Conservative Government, to do something to bring work to areas so badly hit. There was nothing in the Queen's Speech to deal with that matter, which is of prime importance. It is the first priority of those in Oldham who are unemployed and it is of considerable concern to those who still have jobs because they know that the threat hangs over their heads, too.

Mr. Nicholas Winterton: I am happy to follow the hon. Member for Oldham, Central and Royton (Mr. Lamond) as we have a common interest in one of the six largest employers in this country—the textile and clothing industry. I commend the hon. Gentleman and his colleague the hon. Member for Manchester, Blackley (Mr. Eastham) on the robust case that they put to the Government urging them to recognise the problems currently facing the power industry and to take certain action. That action should perhaps have been urged on the electricity generating authorities rather than on the Government, but both hon. Members made a powerful case.
I was sad that the hon. Member for Oldham, Central and Royton was not with me this morning when I attended the annual convention of the British Clothing Industry Association or at the lunch at which my right hon. Friend the Secretary of State for Energy was the principal guest. I shall not refer in detail to my right hon. Friend's speech, but it took up many of the poets raised on both sides of the House in this important debate on employment and manufacturing industry about the essential necessity—I use the two words deliberately — of ensuring a meaningful future for our manufacturing industry. All the other sectors of the economy — services, banking, tourism or whatever — basically serve an industry that makes something and their whole future and raison d'être must be based on a thriving and in the future, I hope, an expanding rather than contracting manufacturing base.
Mr. Norman Sussman, chairman of the British Clothing Industry Association, was not so pessimistic as the Opposition about the problems of industry. He believes that British industry probably now has a better chance than ever before to compete in the world arena. He went on to stress, however, that the Government have a role to play in this. They cannot just sit back passively when almost every other country, developed or developing, is prepared to back its own manufacturing industry in a far more positive way than have successive British Governments.
In the United States, Japan and recently developed countries such as the Republic of China — Taiwan —where Governments practise private enterprise, often epitomise it—if they can buy from their native industry, they will do so, and no country does that with more venom and determination than Japan, with whom we have a ridiculous imbalance in trade.
I also visited Japan in the autumn. I know what incentives, encouragement and help the Japanese give their industry in so many devious but well planned ways. We have to play these people at their own game if we are to survive. It is no use my right hon. and learned Friend the Paymaster General saying that they have come to invest in the north-east and perhaps at Swindon with the Honda plant—that is a Trojan horse. It is primarily for their own interests. They know that, sometime in the future, somebody will put up the shutters and say of the imbalance, "Enough, no more. We will import no more Japanese products."
The Japanese play the game very well. They have established manufacturing plants here, but they are for the benefit of Japan. Some of the schemes have been entered into as partnerships, but those who read how Japan enters partnership arrangements know that, although they might start as the minor partner, they end up as the major one. They will screw their host country into the ground for the benefit of Japan, the Japanese people and the Japanese economy.
The Government should beware of Japanese investment in Britain. We have a duty to safeguard our manufacturing base. There are many things that I could say, but I should like to take as my text some remarks made during an excellent address by Dr. James McFarlane, the Director-General of the Engineering Employers Federation, to a meeting of the all-party group for engineering development in the Palace during the summer. He said:
The nations who win economic battles are those who organise themselves to do so. Like military battles, they can't

be left to chance. Dad's Army would have been no match for the Panzer divisions, whatever we thought at the time. Luckily the barrier of the Channel saved us from putting Dad to the test. But there are no harriers to the inflow of trade.
Some people might ask what is so special about British manufacturing and what is the difference between it and tourism, banking or service industries. What is special is the time scale which, for manufacturing, is utterly different from that for retail, banking, travel and tourism, and trading in the City.
Perhaps I might divert to comment on what my hon. Friend the Member for Wyre Forest (Mr. Buttner) said. Unfortunately, he is no longer in his place, but he spoke of problems that face the City. It is obscene that the banking system — primarily the merchant banks — is prepared to fund massive takeovers which will not produce one extra product or one extra job, but will make the reputation of one or two people and make one or two people and organisations, which are already wealthy, even wealthier. That money should be directed by a responsible and constructive City into the country's manufacturing base.
What is the difference between manufacturing and retail, tourism and banking? Manufacturing cannot make an immediate and substantial return. It appears that the people who produce company reports today are more concerned with the bottom line at the end of each year than about any long-term strategy which will benefit the company, its management and their employees, many of whom are skilled.
Is it not ridiculous that we should have had takeover bids for Distillers, Allied-Lyons, Wedgwood and now Simon Engineering up in the north-west? It is quite wrong that the City should make a quick and ready buck and not be prepared to put money into the country's manufacturing base.
I am a pragmatic, traditional Tory. Unlike Opposition Members, perhaps, I come from a business background where we produced something. What is more, I have been responsible for paying the wages at the end of the week — a very sobering experience. If my right hon. and learned Friend the Paymaster General, others on the Front Bench and their advisers had had similar experience—it is unfortunate that many of them have had none—their attitude to manufacturing industry would be far more realistic.

Mr. Franks: If, as my hon. Friend says, he has experience of paying wages at the end of the week, presumably he has had the experience of earning a profit. If he deemed it necessary to earn a profit, what was the difference between his business and big business?

Mr. Winterton: My hon. Friend intervened cogently earlier. I am afraid that, with hindsight, he may regret his latest intervention. He cannot have been following the logic of my argument. Of course I believe in profit. He should bear it in mind that Vickers at Barrow cannot make a profit immediately after an investment to guarantee the City and the people who have invested in it an immediate and hefty return. People are now making much more money from the quick buck by taking money in and out of the country when the exchange rate fluctuates. It seems wrong that money should be spent on that rather than on manufacturing industry.
The Government have achieved a great deal in regard to inflation. I am sorry that my right hon. Friend the


Secretary of State for Trade and Industry did not mention the problems experienced by industry because of interest rates. Interest rates in Britain are abnormally high, extremely damaging to industry and a disincentive to invest. The hon. Member for Blackley, who has been to Japan with the Employment Select Committee, said that he met there a business man who was able to borrow £250,000 at an interest rate of 4·5 per cent. If such a facility was available to British industries, there would be a dash to the banks and investment, would result which would stimulate the economy in many areas of industrial activity and, in due course, lead to a substantial number of people being taken on. Surely that is what we want.

Sir Kenneth Lewis: I am intrigued at the support that my hon. Friend is giving the Front Bench. Does he believe that, to get interest rates down, it is time to go into the snake in Europe? That would bring them down.

Mr. Winterton: My hon. Friend's many years in this place have given him experience that I envy. I am instinctively opposed to our entering the European monetary system. To a certain extent, I leave the decision to those who know a lot more than me. The Confederation of British Industry appears to be shifting, but my right hon. Friend the Chancellor and the Government are the best people to make the decision.
My job is not just to be supportive of the Front Bench. It is to stand up and say what I believe, bearing in mind my experience and contacts. I have consistently been a strong advocate of manufacturing industry. I do not like being told that the clothing industry has an import penetration amounting to 32 per cent. or that the textile industry is faced with even greater import penetration. In the motor car industry about 57 per cent. of our market is imported, whereas for motor cycles the figure is 79 per cent. or even higher. Even in the clock industry there is 85 per cent. import penetration, and in leather goods the figure is as high as 63 per cent.
Those are only some of the statistics that I could quote. I do not like to see such a development because it is unhealthy for the economic prosperity of our country. In addition, it will not help to generate employment or to reduce unemployment, to which my right hon. and learned Friend the Paymaster General and Minister for Employment is so dedicated.
There are ways in which Government can help without stirring up inflation. Several hon. Members have said that insufficient attention is paid to research and development. That was one of the points that Norman Sussman made in his chairman's address to the British Clothing Industry Association convention today. He said that the Government should assist industry by making contributions towards increasingly important research and development costs.
My right hon. and learned Friend may say that the Government are already doing so, but as my right hon. Friend the Member for Henley (Mr. Heseltine) said, it is no longer appropriate for one employer or company to stand alone facing international competition. We must follow the example of other countries and have a partnership between private industry and Government.
I congratulate the Government on making £100,000 available to the British Fashion Council. That should be warmly welcomed. It is a wise spending of taxpayers' money that can be used to extremely good effect.
The Government should look again at the reintroduction of capital allowances. That would be welcomed by the British manufacturing industry. Reductions in corporation tax do not equate with the capital allowances that manufacturers were able to claim, and they were of great benefit. I heard that again this morning from at least half a dozen of the largest textile and clothing employers in the country. Therefore, these matters should have Government support and should be considered.
I have spoken longer than I intended, but I feel so passionately about British manufacturing industry that I am prepared to speak out time and again from the Government Benches to say that Members with manufacturing background and experience believe that the Government will neglect our future manufacturing base at their peril.

Mrs. Renee Short: The hon. Member for Macclesfield (Mr. Winterton) has entertained and instructed the House with a lively and forthright speech. The Government Front Bench probably did not like it, but the Opposition did. The hon. Gentleman's time on the Select Committee seems to have had some effect on him.
There were also two notable speeches from two other Conservative Members who are no longer present—the right hon. Member for Henley (Mr. Heseltine) and the right hon. Member for Chesham and Amersham (Sir I. Gilmour). Things are certainly moving on the Government Benches.
According to the unemployment unit, the real level of unemployment, based on evidence before the Ministry indulged in the 17 massaging operations, would be 3·9 million — more than 500,000 higher than the present admitted figures. So much for the recent fall in unemployment, and so much for the boasting of the Minister for Employment and the Secretary of State for Trade and Industry.
The reality is that unemployment is rising, as many of my hon. Friends have said. It is rising in the north, and even in Northern Ireland where is stands at 20 per cent. of the working population. Even on the basis of the massaged official figures, 40 per cent. of the unemployed—1·3 million—have been out of work for more than a year, more than one third of them for more than three years. The figures show that more than 1·25 million young people below the age of 25 are unemployed, that under this Government unemployment has risen by more than 2 million and that there is no sign of a substantial reduction in these figures under this Government. That is the reality that we face today.
In the west midlands, a further 125,000 job losses are expected in the next five years if this Government are returned at the next election. That is in addition to the enormous number of job losses that we have experienced so far. In Wolverhampton, 23,000 people are out of work, among them nearly 9,000 who are under 25. Many of them are young people who have never known what it is to have a job since they left school. What a recipe for social unrest. That has been the case not only in Wolverhampton but in


other large cities, including London. What sort of heritage is that for the Government to provide for our young people?
The greatest disaster that befell British industry under this Government has been the fate of manufacturing employment, which has fallen by 25 per cent. Even the CBI forecasts further cuts in manufacturing. It is clear that the hon. Member for Macclesfield has been listening to the CBI.
The Government's claim that employment has risen by 1 million in the last two years is based on a fallacy. In fact, the number of full-time jobs has fallen. The Government's claim is based on the rise in part-time work and self-employment, but those figures can only be guessed at, and as we know to our cost self-employment does not last for very long.
Industrial production is stagnant and is actually no higher than it was in 1979. Manufacturing output is still 7·5 per cent. lower than in 1979, and manufacturing investment is still 17 per cent. lower than it was at the same time. Those figures reveal the serious situation that is now facing manufacturing industry, and they account for the very high level of unemployment.
In 1979, the Labour Government had had five years of desperate struggle behind them, due to unfavourable trade balances and restrictions imposed by financial stringency without any of the assistance from oil reserves that this Government have had—which they have squandered to the tune of £53 billion since they took office.
The most damaging part of the present situation is not the increased rate of bankruptcies, which are twice as high as in 1979, or the rate of company liquidations, which are more than three times as high, but the fact that our manufacturing trade balance went into deficit in 1983 for the first time ever, and is still in deficit, while manufactured imports have increased their share of the British market since 1979.
The Government boast about cuts in income tax, but the burden of taxation as a whole has increased by 6 per cent. of GNP since 1979. At the same time, public assets are being sold off at an alarming rate, and well below their real value, to meet the demands of this wasteful Administration.
Our industries, particularly manufacturing and construction, which are in competition not only with western Europe and America but with the great potential of the far east, are dependent for survival on three principal factors. The first is the application of up-to-date scientific knowledge and experience. That is a sine qua non for industry today. The second is having a reservoir of trained, well-educated, experienced manpower. That is also important. The third is the need for trust and co-operation between management and work force, but we do not have much of that at the present time. It is with deep regret that I must say that none of those requirements have been fulfilled to any appreciable extent uner the Government.
We have a record of 26 Nobel prize winners in the past 30 years for scientific achievement. Japan, which everybody praises for its industrial development, has only four. There is a lesson for us to learn from that. We have the Nobel prize winners, as we should, but Japan has the industrial development and a great increase in the standard of living. Japan also has an enormous political influence in the far east and south-east Asia because it has

many more engineers and it has them where it matters —in the decision-making positions in industry. We do not have engineers and scientists in those jobs.
The same applies to Germany. I have yet to come across a German engineering company of any size — even a small one—where the majority of the board of directors, including the managing director, are not qualified engineers. Again there is a plain lesson for us to learn. In the United Kingdom the high flyers, even in science degree courses, tend to gravitate towards the City, where they can earn many times their salary expectations in industry.
In the other place an excellent Select Committee report on overseas trade published a year ago stated that labour productivity of comparable firms in West Germany was no less than 63 per cent. higher than in Britain because of our lower technical expertise, our lack of adequate education and our lack of adequate training for the work force. Have the Government taken any notice of that report? Of course not.
In October 1982 NEDO reported that Japan produced over four times as many engineers per head of the population as Britain. Moreover, Japan maintains a continuous flow of engineers and scientists from industry back into the universities for periods of one to two years, mainly to update their expertise and knowledge, without any loss of career prospects. That is important. Why do we not do that? Perhaps the Minister will tell us.
In all our major European competitor countries there is a legal obligation for companies to include on the board a proportion of representatives of the work force. Not only has that resulted in a great improvement in industrial relations and in the identification of the work force with their industry, but in production and industrial methods. Why do we not do that? Perhaps the Minister will tell us.
The next Labour Government will have to face up to the need for greatly increased investment in higher education, particularly in engineering. Ways must be found specifically to improve the social and financial standing of engineers and scientists in society, to change the climate of opinion in our industrial companies—at present a mere 5 per cent. of directors have any engineering training and expertise — and to ensure that their management structure includes a majority of technically trained, experienced people at the decision-making level on the boards of directors and management boards. That is the sort of partnership—and the Government are talking about partnership—that we should encourage in industry today. I hope that the Minister will tell us how he will achieve that.

Mr. Cecil Franks: During the debate there has been much talk of the need for greater public expenditure and frequent reference to the north-south divide.
The north-south divide exists for real. One cannot be a Member of Parliament for the north or be born in the north without being aware of the real differences in standards of living and attitudes between the north and he south. One question that has not been addressed or, indeed, asked, is why the divide should exist. There is no logic in it. The divide certainly does not exist because of a failure in public expenditure. Public expenditure has not solved the problem in the city of Liverpool. Indeed, during my years in local government 30 miles down the road from Liverpool, in Manchester and Salford, local authority


colleagues of all parties and I used to look with envy and then anger at the sums going into the city of Liverpool and Merseyside, and at how they were wasted. If throwing money at a problem solved it, today Liverpool and Merseyside would be the most prosperous areas of the United Kingdom.
It is not the quantity of money that counts, but the quality of the targeting and administration of the funds. I listened to the hon. Member for Oldham, Central and Royton (Mr. Lamond) and it is tempting to pick up the gauntlet that he threw down because I take a completely different view from him of the utter waste and squandering of funds in local government. The only difference between local government and any other nationalised industry—local government is a nationalised industry—is that with major nationalised industries, such as British Coal and British Steel, we are dealing with one company, whereas with local government we are dealing with 135 different nationalised companies, each of which is run its own way—inefficiently and incompetently.
I want to talk about the practice rather than the theory and to ask various questions which during the past 12 months I have been asking different Opposition spokesmen, but without success. I shall talk about the effect of industry and economic theory in south Cumbria.
South Cumbria has no special status, but it has a work force and a management which take a pride in what they do—that pride did not exist on Merseyside—and unions which take a realistic attitude. I invite the House to compare that with what happened in Merseyside and Birkenhead where the work force was hell-bent on destroying its industries and jobs, until a change in attitude and direction eventually brought security of employment and jobs.
What alternatives do the Opposition parties offer my area? Both Front Bench spokesmen and Back Bench Members have talked about how they will create jobs. Let me tell them how they will destroy jobs, if they do what they say they intend to do. They say that they will cancel Trident, so immediately 9,000 jobs will be lost. They say that they will phase out Sellafield, which is 40 miles up the road from Barrow, so immediately 16,000 jobs will be lost in the constituency of Copeland together with 50,000 jobs throughout the country.
The right hon. and learned Member for Monklands, East (Mr. Smith) talked about the trade deficit. Will he add to his figure the £12 billion-worth of firm orders currently enjoyed by British Nuclear Fuels, £4 billion of which are export orders? Do Opposition Members realise that the largest exporter from the United Kingdom to Japan is British Nuclear Fuels? When they and the hon. Member for Stockton, South (Mr. Wrigglesworth) speak about the trade deficit, they should add £2 billion for the loss of profits earned by the nuclear processing industry.
I posed this question to the right hon. Member for Llanelli (Mr. Davies) in the defence debate last summer, and I posed it again this afternoon to the right hon. and learned Member for Monklands, East. What will replace the 25,000 jobs that will be destroyed over a weekend if the Labour party has a chance? It is not just the 25,000 jobs immediately but the knock-on effect. There are thousands of other jobs in shops, cafes and restaurants and in the small businesses that supply both Vickers and Sellafield. The Labour party will create an industrial desert in west

Cumbria because it has nothing to put in place of these jobs. When it talks about creating jobs, it should look at the other side of the equation.
An explanation was forthcoming during the defence debate, which was endorsed at the Labour party conference. It is that a Labour Government will build hunter-killers. I presume that the right hon. Member for Llanelli knows what a hunter-killer is, as he is a spokesman for defence matters. I am not sure that the spokesmen for the Labour party on trade and industry matters know. Allow me to inform them. A hunter-killer submarine is a floating nuclear power station. The single reactor in a hunter-killer can provide sufficient electricity for a town of 50,000 people. The Labour party is saying that it will close Sellafield and destroy the jobs that go with it and the local economy because it believes that nuclear energy is inherently dangerous but, 40 miles down the road, to keep a different audience happy, it will build 15 small nuclear power stations.

Mr. Prescott: I addressed Sellafield workers a couple of weeks ago. Even with any phasing-out proposals for nuclear energy, Sellafield will clearly be there by the end of this century.

Mr. Franks: I listen in amazement to a responsible political party that would have the public believe that nuclear energy per se is dangerous but then says, "Don't worry. Even though it's dangerous, we shall take 20 years to phase it out." The Labour party must make up its mind on this issue. I clearly recognise, as do other Conservative Members, the inherent difficulty of trying to square a circle and to circle a square as the Labour party is trying to do.
Not content with destroying the jobs in Barrow and Cumbria, for good measure, we have the 19th century concept of which the Labour party cannot rid itself. The Government have privatised the shipyards in Barrow with the result that 11,500 out of 12,500 employees have invested their own money in their jobs. The Labour party proposes to renationalise the industry, as though bureaucrats and civil servants can run a business better than a business man. Surely the Opposition have been down that road so many times in the past that sooner or later they will realise that state control of industry is a recipe for the destruction of jobs and high taxation. High taxation has a direct correlation to high unemployment. The two go hand in hand and one cannot ask the general public to believe that state control and state management is anything other than the road to inefficiency and incompetence.
My hon. Friend the Member for Macclesfield (Mr. Winterton) made an important point: profit must be earned. Without profits, there are no jobs. He asked why we have such market penetration in the motor car, motorcycle and clothing industries. Is not the answer self-evident? The person who really matters—the consumer who will spend his money—does not buy a Japanese car just because he wants to but because he recognises that the Japanese product is better than the British product. Instead of featherbedding weak and incompetent management and instead of giving in to 19th century work practices and 19th century restrictions— [Interruption.] — Opposition parties ask that incompetent British management should be featherbedded by import restrictions and protection as though, by cosseting British industry, one will improve by one iota our industry. That is the direct route to destroy jobs. [Interruption.]


I always gauge the effectiveness of what I am saying by whether the Opposition attack my policies or my person. The more that they attack me personally, the more satisfied I am that my points are getting home.

Mr. Tony Favell: Will my hon. Friend say a few words about how well protectionism has worked in eastern Europe?

Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. The hon. Member for Barrow and Furness (Mr. Franks) must continue his speech on the amendment.

Mr. Franks: It is tempting to go down that route and speak about protectionism in eastern Europe and the loss of liberty there and to go into the loss of liberty in any European country that claims to be socialist—

Mr. Deputy Speaker: Order. The hon. Gentleman must address his remarks to the amendment.

Mr. Franks: I apologise, Mr. Deputy Speaker. I was trying to deal with the intervention from my hon. Friend the Member for Stockport (Mr. Favell).
What is the role of public expenditure? It is to supplement the private sector, not to complement or compete with it. It is there in a supportive role, to fill a gap, to build a hospital when one is needed or a by-pass when one is needed. It is not there to be in competition with the private sector, which has its own role to play. We hear calls for Government to spend more money. There is no such thing as Government money—it is taxpayers' money, the money of us all. The taxpayer is the consumer and without the consumer, without someone to buy products, all the words in the world and all the taxpayers' money is wasted. Without a consumer there is no producer. That is the fundamental lesson that the Opposition refuse to understand, but which the Government, happily, have taken on board.

Mr. Richard Caborn: I shall try to keep to the amendment, Mr. Deputy Speaker. I thank you for calling me to speak about this part of the Queen's Speech, concerning industry and employment. I say that because I now represent the constituency with the highest youth unemployment rate in the country, and that is according to Hansard, 3 November 1986, column 394. The unemployment of young people under 25 years of age in April 1986 was 4,281, which represents 42 per cent. of total unemployment in the city. I hope that the hon. Member for Barrow and Furness (Mr. Franks) believes that those people have a lot of liberty.
That is only part of the serious situation in Sheffield, where nearly 2,000 young people have not had a job since leaving school. Unemployment in my constituency stands at 10,500—some 26 per cent., and that is on the Government's figures. In fact, if one calculates the figures before the 17 changes that the Government have introduced to massage the unemployment statistics, the more likely figure is 30 per cent., with well over 12,000 people unemployed.
The increase in long-term unemployment is horrific. Nearly 3,500 people in Sheffield have been unemployed for more than two years. Last Thursday I asked the careers office in Sheffield how many people were unemployed. I was told that 5,718 young people were unemployed and, that 4,753 young people were on the youth training scheme. That adds up to 10,471 young people who are

chasing 17 vacancies. It shows the extent of the human misery in Sheffield, Central, and that kind of human misery is experienced in many of our inner cities.
Twelve thousand of my constituents are not, like some Back Benchers, playing at being unemployed for a week in order to gain cheap publicity. Unemployment is a disease, which cannot be understood by pretending to be unemployed. Many young people have never had a job since they left school. The pressures that are experienced by those who have been unemployed for more than two years cannot be appreciated by a Conservative Back Bencher who hops into unemployment for one week of so-called experience. It is a disgrace that he should try to obtain such cheap publicity and then walk off and make a television programme for a large sum of money.
My hon. Friends have already said that the Queen's Speech offers nothing to my constituents. Furthermore, it provides no assistance to industry and very little assistance to local authorities that have to deal with the day-to-day problems of unemployment and its knock-on effect. The programme outlined in the Queen's Speech is an insult. No effort has been made to bridge the divide between the north and the south and the employed and the unemployed. The only growth has been the growth of the human scrapheap. The result of the programme outlined in the Queen's Speech will be that unemployment will become even worse.
Towards the end of 1985 the Archbishop of Canterbury's commission produced its report "Faith in the City". It dealt in depth with the crisis and it called on the Government to take a series of special measures to alleviate some of the problems and to regenerate the inner cities in terms of both their social fabric and their industrial base. The Government's response was lukewarm. Indeed, certain prominent members of the Government were critical of that report. The Government's actions have been the very opposite of those advocated in "Faith in the City".
The local authority in Sheffield has tried to grapple with many of the unemployment problems. It has tried to develop co-operatives and to have a partnership with industry. It has enjoyed limited success, but what has the Secretary of State for the Environment done? He has rate-capped Sheffield and has also reduced the amount that it can spend by £70 million. That shows the commitment of this Government to a city which has the worst record of youth unemployment in the country.
On 7 November 1986, the president of the Sheffield chamber of commerce delivered a speech at the annual dinner of the chamber of commerce. The Sheffield chamber of commerce has been used many times in this House by Conservative Members to discredit local authorities, in particular Sheffield. However, the president said:
The city council is only too aware that rates can continue to increase and it is actively seeking a solution. Some ideas are now being considered, which I am certain would not have made first place in the past. I would like to make one thing quite clear. No-one—and I mean no-one—could manage this city on a rate-capped level of £258 million. It is no use arguing that if certain actions had been taken in the past, things would have been significantly different. Is that not true of most situations? Would not some industries, or companies, or football teams be more successful today, or even be still in business, if they had taken a different decision in the past? The benefit of hindsight is available only after the event.
The president began his speech by saying:


It has become almost customary over the past few years for the gentlemen of the press to use this evening to collect some 'knocking' copy against the city council. This evening, gentlemen of the press, I am sorry, but you are going to be disappointed. Since the start of our respective years of office, the Lord Mayor and I have agreed that no useful purpose could possibly be served by haranguing each other".
That is in stark contrast to statements that were made yesterday from the Dispatch Box. Furthermore, deplorable statements were made by the chairman of the Tory party at a dinner last night. The right hon. Gentleman seems now to be so paranoiac, bitter and twisted that he could not even run a whelk stall successfully.
This Government are universally condemned because of their vindictive, dogmatic and uncaring approach to cities such as Sheffield. If the Government do not rethink their policy, thousands of people could be thrown on to the human scrap heap in Sheffield, at great financial cost. Already the cost to the Exchequer of unemployment in Sheffield, Central is about £67 million a year.
Moreover, there has been deregulation of transport. At one time Sheffield had one of the most efficient transport networks in the country. However, fares have been increased by 300 per cent. and a further increase is in the pipeline. Furthermore, 2,000 transport workers have been made redundant. That is the state of play today, but the outlook is even worse. There is to be a further expenditure cut of 23 per cent. in 1987–88 and there is to be yet another cut of 20 per cent. in 1988–89. That will result in a further loss of services and more redundancies. Concessionary fares may also be put in jeopardy.
The impact of this policy on the vehicle building industry is unbelievable. Indeed, it may have dealt a mortal blow to the bus manufacturing industry in the United Kingdom. Who will gain from that? Conservative Members have shed many crocodile tears. Those who have taken advantage of deregulation by providing minibuses are continental companies. Few of the vehicles have been manufactured in the United Kingdom. Furthermore, those who benefited from the deregulation of coaches were manufacturers of coaches on the continent. Deregulation has not benefited United Kingdom manufacturers. The effect of deregulation on employment in south Yorkshire has been devastating. Voluntary organisations have had to curtail many of their activities. Deregulation has dealt a mortal blow to the social fabric of the city. For what purpose? Was it to prove a dogma or an outdated economic theory, or was it to reinforce the belief that one is never wrong?
The Prime Minister has tried to formulate industrial policy on her feet, which is not unusual, or by writing letters to Back Benchers — for example, to the hon. Member for Glanford and Scunthorpe (Mr. Hickmet), about the privatisation of the steel industry. I warn the House that if the Government privatise the steel industry in the manner outlined in that letter, it could sound the death knoll of the steel industry. Every other European steel industry is going in the opposite direction. They are going for economy of scale. To anyone who knows anything about the steel industry, the argument that steel workers will be asked to invest their redundancy money to buy shares in ludicrous.
I conclude by quoting part of the report "Faith in the City" commissioned by the Archbishop of Canterbury:

It is not charity when the powerful help the poor … it is justice.
That is what the British people are asking of the Government. There is no mention of that in the Queen's Speech.

Mr. Charles Morrison: After the difficulties and gloom of the recession years, it is encouraging that some of the indicators are beginning to point in the right direction. I have no doubt that they will be helped along by the autumn statement of the Chancellor of the Exchequer. What pleased me more than anything else about his statement was the increase in capital expenditure of about £1 billion. I have been asking for that for some years. I welcome the Chancellor's action, as it will create much-needed infrastructural improvement and will push down the already falling unemployment figures a little further.
There is some cause for quiet satisfaction about the way in which some things are going, but it is not yet time to throw our hats in the air. Although we are doing better, other countries do likewise. As we have heard, manufacturing output has reached its highest level for six years, but it is still well behind the figure for 1979 and 1980. If we take the 1980 index for manufacturing output as 100, France has reached 98—but it has mostly had a Labour Government—West Germany has reached 110, the United States has reached 119·4, Japan has reached 122·3 and Britain has reached 105·6. There is an improvement, but it is nothing like enough.
On the plus side, since 1980, productivity has increased by 28 per cent. Even so, against that background, it is not surprising that employment in manufacturing is still falling, that import penetration is still growing and that the United Kingdom's share of world trade is still falling. Some believe that what we lose on the swings of manufacturing we regain on the roundabout of service industry. That is seriously to misjudge the position. Granted that service industry is responsible for 60 per cent. of the gross domestic product and manufacturing for only 20 per cent.; granted also that manufacturing employs only about 5·5 million people; but another 20 million people depend upon it in one way or another. Furthermore, such is the relationship in exports that a 1 per cent. fall in manufacturing exports requires a 3 per cent. rise in services to compensate.
No one in his senses would wish to detract from the achievements of the service industries—most notably the City of London—but, relatively, manufacturing industry remains far more important. This seems to have been recognised in other countries much more than in Britain.
Today, we have been reminded that manufacturing output as a proportion of gross domestic product has fallen in most advanced countries. The figures from the report of the House of Lords Select Committee on External Relations, Trade and Industry show that, in 1984, in the United Kingdom, manufacturing production was lower by 4·3 per cent. than it was in 1975, whereas in Japan it was 61·4 per cent. higher, in the United States it was 41·6 per cent. higher, in West Germany it was 16 per cent. higher, in Italy it was 22·1 per cent. higher and in the Netherlands it was 22·7 per cent. higher. Those figures show that, although manufacturing industry has fallen as a proportion of gross domestic product, it is only in Britain


that manufacturing industry has fallen in absolute terms. That is a frightening thought, which must be kept constantly in the Government's mind.
The present state of the United Kingdom's manufacturing industry can be summed up as being much more efficient than in 1979, more productive, healthier, more realistic and more determined, but its great weakness is that there is not enough of it. What can we do to expand and develop it? There is no easy answer, but I should like to make some comments on education, attitudes and strategy, which to some extent are complementary to the remarks made earlier by my right hon. Friend the Member for Henley (Mr. Heseltine).
On education, we must create a better qualified, better educated and more highly skilled labour force. I welcome the announcement of the city technology colleges, the two-year youth training scheme and other training initiatives, but we must recognise what is happening in other countries. For example, only 53 per cent. of our 17-year-olds are still being educated. In the United States, the figure is 87 per cent., in West Germany it is 89 per cent. and in Japan it is 94 per cent. I realise that the concept of apprenticeships may have changed, but 10 years ago in the United Kingdom there were 100,000 apprentices. Now there are 40,000. Ten years ago in West Germany, there were 500,000 apprentices. Today, there are 600,000. Much more must be done in skill training and retraining. As a prerequisite, much more must be done to interest people in skill training. Even with the current high unemployment, skill shortages exist, especially in the south of England.
On attitudes, manufacturing industry must be given much more respect as the most important creator of wealth. If it is, it will attract more young men and women of ability. The City of London exists to manage wealth. Tourism is a characteristic of the expenditure of wealth. Service industries, to a considerable extent, would not exist without manufacturing industry to service. Those who mine, those who till the soil — they have been too successful —and above all those who turn raw materials into finished products are most responsible for the creation of wealth. Thus, they should be treated as an elite. We are not doing so to the extent that we should.
In Britain, also, we must learn to accept that we live in a small country. From Los Angeles to San Francisco is 350 miles. From New York to Washington is 237 miles. In each case, the latter city is considered local to the former. From Dover to Carlisle or the Scottish border is a mere 392 miles. From London to Sheffield is 160 miles. Yet in each case, we treat the latter city as though it was in a different hemisphere, despite good rail, road and air communications.
It is worth noting that the attitude in Britain is not held by incoming investors. I know of two Hong Kong Chinese clothing firms that have established factories in Britain in the past year—one in Liverpool and one just outside Newcastle upon Tyne. Those companies were established in those parts of the United Kingdom because the companies, the management in Hong Kong, having made the decision to set up business in Britain, looked first and foremost at where there was spare labour. Not surprisingly, they found that in the north and they went there. It was that consideration, not grants, which led those businesses to make those decisions.
A major mental effort is needed by United Kingdom business men and investors in new industries to accept that

the British Isles are small, so there is an overwhelming argument in favour of development where there is a large pool of unemployed people and a manufacturing tradition. What is more, that must be done because there simply is not enough space to go on using up more and more land in the south.
But Government must give a lead, and here I come, last but most importantly, to industrial strategy. My right hon. Friend the Member for Henley referred to the views of the CBI. The director general of the Engineering Employers Federation recently wrote:
British industry needs consistent understanding and support if it is to succeed in the hard and unforgiving markets of the world.
The Government must constantly remember that in the harsh world free trade and competition may well be the theory, but worldwide too much trade is not free and too much competition is not fair. Hence, a developing partnership between industry and the Department of Trade and Industry is of immense and fundamental importance if British industry is to compete effectively. I was also very pleased to hear my right hon. Friend arguing again for an enhanced status for the Department of Trade and Industry.
My right hon. Friend the Secretary of State for Trade and Industry was encouraging today. May he have continued success in his endeavours to create a climate in which industry and business can prosper. Only if he succeeds can we guarantee a healthy balance of payments, falling unemployment, inner-city redevelopment and greater national prosperity.

Mr. Don Dixon: The Labour party's amendment refers to the lack of a Government
strategy for securing a continued reduction in unemployment.
My right hon. and learned Friend the Member for Monklands, East (Mr. Smith) was correct to refer to the famous—or infamous—remark by the chairman of the Tory party as Secretary of State for Employment when he suggested that the unemployed get on their bikes. What the right hon. Gentleman forgot was that when people who are made redundant move to an area for a job, usually the last in are the first out. My constituents have experienced that. People from regions such as mine find themselves in the midlands, or wherever they have gone for work, out of work and hundreds of miles from their friends and families. That is what happens when the Government try to turn us into a nation of industrial nomads.
The right hon. Gentleman also forgot that the young and active tend to move away from the community. They do not take the old people's homes, community centres, libraries or schools with them. They are left to be paid for by the community and there is nothing in the Queen's Speech to say that the £400 million which the Government have taken away from the five metropolitan districts in Tyne and Wear in rate support grant is to he repaid.
There is nothing in the Gracious Speech to help the 7,945 unemployed in my constituency. That is the Government figure. The unemployment unit figure is 9,428 people unemployed.
In reply to my Adjournment debate last week on unemployment in my constituency, the Minister referred to jobclubs. I do not know whether that is a Government strategy to create jobs. The only jobs that they create are for the people in them.
I do not know whether the Minister realises what it is like to be one of the long-term unemployed. Since the Government took office long-term unemployment in my constituency has increased fourfold, from 900 to almost 3,600.
What does the Minister think happens when someone who has been out of work for two or three years has a little envelope dropped through his postbox inviting him to go down to the jobclub? I go down to the jobclub and the interviewer says, "Look here, Dixon, they tell me that you have been out of work for a considerable time. What do you do?" I say, "Well, I am a ship's carpenter. I have worked in the shipbuilding industry." The interviewer says, "Well, I am sorry, you will appreciate that the shipbuilding industry has run down. There is no shipbuilding on the south side of the Tyne." In the whole constituency of Jarrow only five men are involved in shipbuilding. Hawthorn Leslie's, which employed almost 3,000 people in 1979, is now closed. Palmers is on care and maintenance. Mercantile dry dock, which employed almost 400, is now closed.
"I am sorry, Mr. Dixon," the interviewer says, "but shipbuilding is definitely out. Is there anything else that you can do?" I say, "Well, I bought a plot of land and built my own house." The interviewer says, "Oh well, there you are, you will appreciate that the local authority which, five or six years ago was building 700 houses a year, built only 46 last year and is building 25 this year."
The housing investment programme allocation to the local authority which was £14·3 million when this Government were elected is down to £5·3 million. To keep up with 1979 value, it would have had to be almost £27 million. So the local authority are getting only one sixth of the amount of money that it was getting in 1979 to build and maintain its housing stock. So it is no good expecting a job in house building.
The interviewer asks, "Is there anything else, Mr. Dixon, you can possibly do?" I say. "When I was in the army and I used to be put on jankers I would be sent to the officers' quarters and told to cut grass with a pair of scissors." The interviewer says, "We may be able to help you with something there. We may be able to send you down to the local authority and it may have some grass cutting job for you." I say, "But I read in the paper the other week that because of the cuts in the rate support grant the local authority is paying gardeners off, so how on earth could it employ me, a ship's gardener, to cut grass?"
That is the Government's idea of artificial jobs. The local authority pays off experienced gardeners and then we go along and, under the Manpower Services Commission, people who are trained to build ships or houses are given money. That is what the jobclubs are for. That is what we are talking about. Do not let us have this academic nonsense when we talk about unemployment.
The problem is that some Conservative Members have never seen a pair of overalls, let alone worn them, yet they talk about unemployment. The hon. Member for Macclesfield (Mr. Winterton) talked about paying men. Certainly we want to pay men. People want to be employed. They want to go out and earn a living for their families. That is what this is about. The majority of people about whom I am talking are not percentages or statistics, they are wage earners and bread winners — one-parent

families and married people who want to earn to support their families. That is what we should be addressing ourselves to in the House.
Other hon. Members want to speak, so I do not want to take up too much of the debate today. But when hon. Members debate unemployment in the House, I wish that they would talk about people, not about figures, percentages and statistics.

9 pm

Mr. Robert Harvey: Three and a half years ago, I was elected for Clwyd, South-West, a constituency where the unemployment rate stood at about 18 per cent. At that election, like other Conservative party candidates up and down the country, I said that, contrary to the claims of the Opposition parties, inflation, which affects the climate of industrial investment and which had been brought down from 15 per cent. to 5 per cent., would not rise again as soon as the election was over. In fact, it has remained at 5 per cent. or lower for all of those years.
Like other candidates, I claimed that economic growth, which was about 2 per cent. that year, would continue to be maintained. In fact, it has been higher since then, with growth last year exceeding that of any other western country, even that of the United States. That is a remarkable recovery by any standards. I claimed, along with other Conservative candidates up and down the country, that the Government would stand up to extremist union minorities that sought to railroad their members into unwanted strikes, and from the miners' strike onwards that has been the case.
This Government have delivered. The story of this Government has been one of constant, uninterrupted, solid, even dull achievement, based on sound finance, while never ceasing to increase Government spending in the areas where it really matters, such as the NHS and education. Yet there was one area in which I felt that achievement was missing. I refer to the decline in manufacturing industry and the level of unemployment, which was running at more than 3 million. I believed that the unemployment figure was unlikely to fall unless special action was taken to bring it down. I believed that we were facing something unique, and quite different from anything that had gone before — something that the economists have no name for, although I shall try to give it one: jobless growth. Never in any previous period of such sustained growth in British history has unemployment failed to fall as it has this time. As the economy has recovered and expanded, the level of joblessness has stayed—until very recently—exactly where it was. Indeed, I welcome the fall in the latest figures.
The answer of the Labour and alliance parties has been to say that we should expand the economy still faster. If the present level of expansion is failing to generate jobs, there is no reason why a much faster rate should be expected to do so. Moreover, much faster economic expansion, on the scale advocated by the Opposition, would destroy the sound foundations for our present level of economic growth. No, that is not the answer.
What is the cause of the problem of jobless growth? Of course demographic factors have in part been responsible. Of course the number of part-time jobs has grown encouragingly and dramatically. Of course the high level of wage settlements has continued to price workers out of


jobs. Yet all of those things, even together, do not explain how unemployment can stay above 3 million after five years of economic growth.
I am passionately convinced that unemployment has failed to fall because we are witnessing a modern industrial revolution. The new high-tech industries that are replacing the old are creating more wealth but employing fewer people. That must be welcomed. The opportunities for a more leisured and prosperous society are huge, and in the long run new service industries should reduce the level of unemployment. But in the short term, there are hundreds and thousands of victims of this process, unskilled and semi-skilled people being shaken out of the traditional industries. They had to be shaken out of them, because there was no future for them. [interruption.] Those people are now stranded in the twilight zone of idleness that is the lot of the unemployed. It is interesting that the Opposition should find the lot of the unemployed so amusing.
Thus the Government had to get to grips with an entirely new problem. I have long felt that the Government should be prepared moderately to relax the fight against inflation in an attempt to help the unskilled and semi-skilled, who would otherwise have no hope of a job. This time last year in the House I urged the Government to embark on a carefully targeted programme of job creation through investment in public and private housing. I also believed that they should concentrate on a skills programme to help workers adapt to the new technological revolution.
Finally, it seemed right that, if there is to be more wealth and less work in society, that work should be shared more equally by encouraging a shorter working week, early retirement, job sharing, and so on, for those who want it, within the proper economic constraints. I still urge the Government to embark on a long-term review of the impact of new technology on working patterns, and to introduce a reduction in the age of qualification for the job release scheme to 60, so that those who seek earlier retirement can take it, and in so doing—as we heard earlier today — create 50,000 jobs at a cost of £132 million. That is surely one of the most cost-effective methods of cutting dole queues while assisting those who have done arduous jobs all their working lives.
I have, however, long been deeply critical of the view that tax cuts, however desirable they may be in themselves, are a cure for unemployment. After all, the standard rate of income tax has fallen by 4p in the pound since 1979, but unemployment has not fallen. For that reason, I was unable to vote for the 1p reduction in the standard rate that was a feature of last year's Budget. By contrast, after the autumn statement I could not but warmly commend my right hon. Friend the Chancellor of the Exchequer on the realism and courage that he had shown. That my right hon. Friend is not the monetarist dogmatist, as he has for so long been portrayed by the Opposition, is obvious from the way in which he has allowed M3 to rise by 18 per cent. this year. Some may criticise that as irresponsible but the Opposition cannot possibly consider 18 per cent. too little.
The Conservative party is not one that is given to dogma. Above all, it is pragmatic. If one approach is not yielding results, the party has always had the courage and common sense to learn from experience. Without abandoning his absolutely correct goal of keeping inflation under control and retaining international confidence in the economy, the Chancellor of the Exchequer has used the money that the success of his

policies has made available to seek to reduce the present unacceptable level of unemployment through spending on local authorities and education and, above all, a massive increase in spending on housing. That is an act of political courage and responsibility and is not to be confused with the sort of binge that is being urged by the Opposition, which is to increase spending by £26 billion.
My right hon. Friend the Chancellor of the Exchequer has not stolen the Labour party's clothes, because they are at least six times too big. Nor has he indulged in a pre-election spending spree of the sort with which we are all too familiar under previous Labour Governments. The difference is that the Labour party usually spends money that it does not have while the Government are spending money that they do have. With the public sector borrowing requirement still running at only £7 billion and with Government spending as a proportion of gross domestic product continuing to fall, there is no danger of inflation as a result of these measures. The money that is being spent has been earned and will not have to he paid for in future.
Over the past seven years our economy has been one of the most consistently strong performers in the western world. The only charge that can be levelled against the Government is that of erring on the side of caution, and that charge can no longer be levelled after the autumn statement. The great tradition of the Conservative party is to let those who want to better themselves and get ahead do so, and enrich all of society in the process, while helping those who cannot help themselves. That is what the Government have done and I hope that when the House comes to debate the autumn statement the Opposition will have the good sense and honour to support the economic measures that are wise and bold and with which they surely cannot disagree.

Mr. John Prescott: The hon. Member for Clwyd, South-West (Mr. Harvey) reflected a great deal of what has been said in the debate, and I mean the whistling in the wind and the rhetoric about the success of the Government's policies that have come from Conservative Members. At the same time, Conservative Members have expressed extreme concern about unemployment and the decline in manufacturing.
Earlier in the debate there were many more hon. Members in the Chamber than there are now. The right hon. Member for Henley (Mr. Heseltine) referred to the number of Conservative Members present and said that it illustrated their great concern. That concern lasted only until the end of his speech, when he left the Chamber not to return again, taking his cohorts with him.
Most of the evidence that has been adduced by hon. Members on both sides of the House is that many of the indices of the economy are reflecting the crisis that we are witnessing in the balance of payments, real interest rates and the investment level in manufacturing, which is below that which prevailed in 1979, and not success. Many areas of the economy show the decline over which the Government have presided.
One of the constant themes of the debate has been the decline of manufacturing industry. The hon. Member for Devizes (Mr. Morrison) said, correctly, that, while it is true that manufacturing is declining in most developed countries, it has not declined in any of them at the absolute rate at which it has declined in Britain. That is one of the


strategic facts about the basic British economy to which any Government must address their attention. When the oil money runs out, that will create real problems, because we will still have to finance an economy on this scale and we will also have the ever-increasing problem of the balance of payments.
It was suggested that the Government may be running into an economic crisis. I did not hear the speech of the right hon. Member for Chesham and Amersham (Sir I. Gilmour) but I understand that he said that perhaps the Opposition would not like to inherit the problems that are coming. That is true, but I am afraid it is the lot of Labour Governments in the post-war period to inherit the problems of Tory Governments. That is true of whatever period one cares to select. We have constantly had to deal with that sort of problem.
Little has been said about unemployment, and I was amazed that at Question Time the Paymaster General found it difficult to say whether he could make an assessment of the real figures of unemployment. For him to doubt that an assessment could be made is flying in the face of evidence. The claim last week that unemployment had dropped by 20,000 was welcome, although the drop had more to do with the fiddling of the community programme schemes, the availability interviews and the Restart programmes. Given that there was a reduction of 20,000, that was over the 90 months during which the Government have been in power, because in 81 of those months unemployment increased at that rate each month. The Chancellor of the Duchy of Lancaster said in a speech that 600,000 jobs would he lost if a Labour Government were elected. More jobs than that have been lost each year over the time that the Government have been in office.

Mr. Thurnham: Will the hon. Gentleman give way?

Mr. Prescott: No, I do not have enough time.
For the Chancellor of the Duchy to suggest that that might be the cost of installing a Labour Government is hypocrisy. Perhaps I could give the Paymaster General a list showing 18 changes that have been made to the unemployment figures. I do not want to deploy that argument again, but officially I shall give him the list and perhaps he will write to me if he thinks the figures are wrong. They show the adjustments that the Government have made since they came to power. I shall not dwell further on that, except to say that, if one looks at a House of Commons Library paper about unemployment and the adjustments and changes that have been made, one sees that there have been nine large changes. Two of them increased unemployment by 43,000 and the others decreased it by 380,000. That is a considerable difference.
The House of Commons Library is much respected by all hon. Members and the research by the people there is generally accepted. They have prepared a document about unemployment and perhaps the Paymaster General will look at it to see whether he accepts that the level of unemployment is considerably greater, quite apart from the schemes, than the level given officially by the Government.
I have looked at statistical changes by the Government and in four Government Departments a survey carried out by the Library found that since 1979 the Government have made 100 adjustments to the statistical data. The

Government have not only been fiddling the unemployment figures; they have been fiddling figures in a number of Departments. Perhaps we could take as an indicator the number of people who are employed and see how many people are employed now and how many were employed in 1979. The figure has fallen from 22·6 million to 21 million. That is a fall of over 1·5 million in the number of people in work. That shows the scale of the decline since 1979 and the reality of unemployment.
The Minister denied that there was intimidation at the work activity interviews or restarts and said that they were not designed to remove people from the unemployment figures. However, more and more evidence shows that that is not true. We all receive many letters about intimidation. He did not chose to deny today that in the Devon area 70 per cent. of people referred to the adjudicator were restored to benefit. That must show that the amount of interviewing in the early stages is intimidating people in order to remove them from the list. The adjudications show that. The Paymaster General claims that as one of the successes of his system, but the fact that 70 per cent. of people are being taken off at first interview shows that his Department should look much more carefully at the way in which interviews are being conducted.
I have before me a report in the Yorkshire Post of 13 August 1986 about a women who was refused a place on the community programme scheme because she was not registered as unemployed and was therefore not eligible for benefit. A top civil servant, Mr. Fodgen, appeared before the tribunal and according to the article,
admitted that this had the effect of reducing unemployment figures, and that this had been a factor in the decision of Ministers to change the criteria.
That was said before a tribunal by an under-secretary in the Department of Employment.
I do not know whether the Paymaster General is going to rush to the Dispatch Box to give an answer similar to that which he gave when we gave him evidence of an official who had told people, "You must get 30 thrown off the list to earn the money to pay for your wages." He was referring to the "bounty hunters". The Paymaster General disowned that official, saying that the official had had no authority to make such a statement. The right hon. and learned Gentleman was right, but I hope that he corrected that attitude among officials. Yet here there is a top civil servant from his Department appearing before the tribunal and saying that the Government's policy is to use the community programme to reduce the unemployment figures. I give way to the Paymaster General.

Mr. Kenneth Clarke: I am grateful to the hon. Gentleman for giving way, because, for reasons of time, I was not going to intervene. On his first point, one of the main reasons why benefit is withdrawn from people is that they have failed to attend an interview about their employment. That is a long-standing rule. As the regulations now stand, a person has to fail to attend two interviews before benefit is disallowed. But half those people do attend an interview and are reinstated. That is, in part, the reason for the figures from Devon and everywhere else.

Ms. Clare Short: That comes before the cases go to the adjudicator.

Mr. Clarke: I have not seen the Devon figures. Half those whose benefits are suspended for failure to attend an


interview get their benefit back, either because it is reinstated by the adjudicator or because they turn up at an interview. I shall have a look at the Devon figures.
On the hon. Gentleman's second point, we have chosen to make the community programme available to those who receive benefit because that is the best test of those in greatest need of the work experience available under the community programme. Of course it has an effect also on the unemployment statistics. But we are talking about the 3 million unemployed, and the hon. Gentleman can hardly object to the fact that we concentrate the community programme on those whose conditions we constantly debate in the House.
Mr. Prescott: I think that the Paymaster General has not denied what the civil servant said. It was one of the criteria used by the right hon. and learned Gentleman. He should be aware, with respect to what he said about the adjudicator, that these are cases that have been suspended and have arrived at the adjudicator. Seventy per cent. of them have had their benefits restored. The right hon. and learned Gentleman needs to bear that point in mind.
I am concerned about another matter. The right hon. and learned Gentleman says that he has not seen the Devon figures in the press, as I did. It is about time he demanded the figures from all the trial areas to find out what is going on in those areas. I hope that tonight he has learnt the lesson and that he will go to the trial areas to see whether victimisation is occurring at interviews.
The Government make great claims about 1 million jobs, but they have created part-time, self-employed work. For example, part-time employment has increased considerably. That is a major part of the jobs involved. It would be fair to see what has happened to full-time equivalents in work. Under the Labour Administration, the number increased by nearly 100,000. Under this Government, it decreased by 1·5 million. That is another reality of the change in the market.
The Government make great claims about the self-employed and say that they are concerned about the figures. Under the Labour Administration, the number increased by 342,000. Under this Administration, it increased by five times as much to 1·5 million. The reality is that the definition of employment is based on a 5 per cent. survey. It is a simple projection based on surveys, not a definition. The Paymaster General says that he cannot get a figure to find out the number created by the adjustments in the unemployment figures, but it does not stop him fiddling the self-employed figures which are based on a 5 per cent. survey and not on a count of the number of self-employed. We very much resent the double dealing by the Government which is exposed in these figures.
The Government are now claiming that there are more vacancies than before. The vacancy level is equivalent to the level of 1979. That is claimed as a success by the Government. They usually use, not 1979, but 1983. That is what they keep referring to. They do not go back to 1979. There are a couple of interesting points about those vacancies. First, in 1979, unemployment was one third of what it is now. To compare vacancy rates is hardly the same in that situation. Secondly, the proportions of vacancies provided by community programmes in 1980 was 2·5 per cent. It has now reached nearly 15 per cent. The Government are offering those part-time low-paid, skivvy jobs on community schemes, calling them vacancies

and then saying that vacancies are at a record level. Not only do they fiddle the unemployment and employment figures but they are now fiddling the vacancy levels by providing community programme schemes. That is the record of the Government. That is the record that nobody has time to listen to when they explain the position on unemployment.
That kind of argument would have fitted Goebbels well. In an article in The Guardian the Chancellor of the Duchy of Lancaster said that Labour's policy would cost 850,000 jobs. Nearly as many as that have been lost every year since the Government took office. I looked at the justification for that. Apparently, 600,000 of those jobs would be lost by the implementation of a minimum wage. I do not know what is the evidence for that. Nobody has provided any evidence. The assumption is that £120 will be paid, which is the minimum common decency rate under the Council of Europe. As we point out, there are 1 million full-time workers who are paid less than £80 a week and there are 3 million full-time workers who are paid less than £100 a week. One has to make a judgment as to whether to pay £80, £90 or £100. That judgment has not been made by the Labour party. One cannot assess the cost or the jobs lost. It is fiddled, as they fiddled the cost of Labour's programme.
It is claimed that 150,000 jobs will be lost as a result of sanctions on South Africa. Where is the evidence for that? Where is the justification and the research? The hon. Member for Barrow and Furness (Mr. Franks) — he made many remarks about hon. Members not being present and he is not in the Chamber now—said that 100,000 jobs would be lost because of our nuclear energy programme. He said that Sellafield would close overnight. We believe in phasing out nuclear energy. However, if anybody believes that we can phase out nuclear energy before the next century he is living in cloud cuckoo land. Anybody knowing the technical problems involved in phasing out nuclear energy, no matter how one plans to go about it, knows that it is extremely difficult to implement and to start the reprocessing for which Sellafield is needed. We hear election rhetoric. People are trying to scare those in jobs in the nuclear industry. Again we hear the typical Goebbels slander that we heard from the right hon. Member for Chingford (Mr. Tebbit) about the BBC. He is now getting ready for the election. Whatever the argument, clearly there is no substance.
One theme that has come through in the debate, which apparently caused controversy—I am shocked that it should cause controversy—is that for decades Britain has not trained enough of its people. Labour Governments and Tory Governments have not trained enough members of the labour force. There is no doubt about that. If we look back to the debates of 1964 when the Tories established the industrial training boards, the analysis then about the shortage of every type of skill, traditional and modern, and in information technology is the same today. In fact, it is considerably worse now because the Government have abolished 16 of the industrial training boards. They have got rid of the levy system and the Manpower Services Commission has closed 29 of its skill training centres.
The hon. Member for Devizes spoke about the scale of apprenticeship decline in this country and about our training compared to our competitors'. He rehearsed the arguments on training, competition and competence that are to be found in documents that have been produced for


us all to read. The reality of training in Britain is that we have never done enough. We are certainly doing less now and we are even short in some of the basic trades—

Mr. Thurnham: rose—

Mr. Prescott: Sit down.
We are short of workers in some of the basic trades such as bricklayers, plasterers and all those involved in housing building programmes. In the construction industry, there has been a collapse in the number of apprenticeships from 65,000 to 49,000, and that industry maintains the levy system. [Interruption.] Those apprentices have been replaced with cheap YTS labour. So in the construction industry there are many semi-skilled people who cannot get work. We do not have the bricklayers or plasterers to provide the skills. That is what we are desperately short of. If anyone is in any doubt, he should look in a jobcentre, at the little notice that says, "We want a bricklayer, not a time-served bricklayer. None of the YTS or community scheme 12-month jobs. We do not want them. We do not want to pay for training." Industry has never wanted to pay for training. Even in engineering—

Mr. Thurnham: Will the hon. Gentleman give way?

Mr. Prescott: Sit down.
Even in engineering, 24,000 apprenticeships have been reduced to 9,000. There has been a loss of 150,000 apprenticeships in engineering and manufacturing. Even the Butcher report for the Department of Trade and Industry said that we are desperately short of people for modern information technology, computers—all those sort of things. The Government's own report says that.
The reality is that our industry has always seen training as a cost. It has never wanted willingly to put money into investment on training. There are some good exceptions, such as Rolls-Royce and Jaguar. It is interesting to note that Jaguar spends 1 per cent. of its turnover on training, not such an astounding figure, but one that the Minister always claims. Jaguar has not been destroyed by setting that figure. According to the Secretary of State, it is a success symbol. Why? Because it puts in sufficient investment, it gets the productivity. That is at the heart of what we are talking about—not wages in relation to productivity, but how much we put into investment and improve design and productivity.
People suggest that if British industry paid a I per cent. levy, that would be destructive of British industry. The fact that it is not spending 1 per cent. is destructive.
A comparison has been done on how much the British spend on training as a proportion of their turnover. We spend 0·15 of 1 per cent. on training, which is the equivalent of £2 billion, according to the Manpower Services Commission. Most of our competitors —Germany, Japan, the United States and others—spend 3 per cent., which is about £30 billion compared to our £2 billion. The result is the difference in skills and apprenticeships, training, and competition. The hon. Member for Devizes catalogued some of those differences.
The public sector is no better. It has been ditching training and apprenticeships as fast as the private sector. All the nationalised industries have been doing it in their desperate desire to get the return on capital to show that they are profitable in the short term while not investing.

The public sector has been just as bad. The Government have put pressure on the figures so that it ditches investment and treats training as a cost, not as an investment. We have found constantly that the public sector has done those things.
Let me make it clear that there will be a radical training programme which meets our needs. It will have to be financed by levies, grants and some form of industrial boards and organisations. Those will be the means by which we finance the training programme. If industry abroad does it and British management will not, what alternative is there for the Government? There is only one. The Government believed that if one gave the money back to industry, it would invest. The Government have given £30 billion back in corporation tax, but it was not put into investment or training. It was put into a massive outflow of capital abroad, to invest in the countries of our competitors.
We are not prepared to tolerate Britain being turned into a semi-skilled skivvy nation. We have to train our people. We have to pay for them. One thing is for sure: industry should carry its fair share of those costs just as its competitors do. Believe me, industry will carry its fair share and its costs of that training. [HON. MEMBERS: "Oh."] Yes.
I shall tell the House something else. In all the industrial training boards before, there were so many exemptions from paying the levy that 75 per cent. of companies got out of paying it. We cannot tolerate that.
We all have to pay a fair share towards training. If industry will not do it, the Government are the only body that can deal with that strategic decision. If the 1 per cent. turnover shakes people, let me tell them that it was Mr. Geoffrey Holland, the director of the Manpower Services Commission, who in a paper to the commission made it clear that he thought that it should be about 2 per cent. of turnover. A Labour Government would do something about training.
During the debate on the Queen's Speech, some hon. Members claimed that the expansion of public expenditure was welcome. The proposed public expenditure is a bit of a fraud. The proposed £8 billion is to deal with over-expenditure. In reality, that is not a great deal of money, but it is a figure that stands out. It just covers the overexpansion in a number of local authority budgets. As the right hon. Member for Henley said at the time of the 1983 election, "Spend, spend, spend".
Some £400 million has been put aside for housing. We know that the requirement is for some £20 billion and that local authorities have about £6 billion in their accounts from capital receipts. Talk of £400 million is, therefore, an insult when there are 500,000 building workers unemployed and when 2,000 houses a week fewer are being built now than under the Labour Administration. It clearly makes sense to put the resources, people and demand together to create jobs.
Hull has devised a plan to build 1,000 houses. It is possible for local authorities to enter into a housing programme, undertake proper training and so meet the training needs to provide the skills needed in those housing programmes. A total of 5,000 jobs would be created over a five-year period at a cost of £66 million a year. That is a properly costed figure. We can make a judgment about whether we are prepared to finance that programme, but that order of expenditure can begin to produce jobs. Let us make no mistake about that.
Local authorities can and have created a considerable number of jobs. The Secretary of State for the Environment sneered at local authorities that do a very good job fighting to maintain services and jobs against a hostile Government, who have taken £20 billion off local authorities in rate support grant and then produce the kind of schemes described by the Paymaster General when he went to Southwark and offered it £8 million for the task force scheme, which is intended to co-ordinate jobs.
My hon. Friend the Member for Newham, North East (Mr. Leighton) recently asked how many things had been done under the new task force. He was told that 31 projects had been initiated. Interestingly enough, one in three of them are training projects, which again reveals the failure in training. About £1·3 million has been spent since February — not a large amount. It is approximately £40,000 for each project. I am sure that most of the projects have been well used. One is a feasibility project for a shop selling ethnic culture items in Leeds. I am sure that there is a need for such a project, but it is hardly the kind of housing programme or jobs that we need to get people in our inner cities back in employment.
I have many examples of similar projects, such as a feasibility study to set up a nursery in Leeds. That is great, but Leeds needs more jobs than can be provided in a nursery. There is a feasibility study for a co-operative shop on the Gloucester Grove estate in north Peckham. I do not doubt that there is a need for such projects, but they are peripheral and marginal to the problems in the inner cities.
If the Government want a policy for local authorities to create jobs such as that envisaged through the task force, they should ask the local authorities to provide alternatives. Indeed, Southwark has sent the right hon. and learned Gentleman a plan that would create 5,600 new jobs at a cost of £135 million, costed in capital and revenue, at an average cost of £9,000. Of these, 20 per cent. are in housing and 20 per cent. in social services.
Do not think that jobs in the social services are not needed. There was a demonstration today by COHSE about mental health welfare. This caring Government are throwing patients out of mental hospitals into the community to be cared for, yet they do not give any money to local authorities to look after them. That is the kind of community care that exists. When Southwark talks about providing jobs in mental health care or in caring for old people, it means real jobs meeting real need with real money. That is the alternative course that a Government can take.
The Labour party offers that alternative — not the skivvy community schemes of the Tory Government. We have an alternative for providing real jobs through local authorities, nationalised industries and the regeneration of our industrial base. Given that chance, we will return Britain to work in a positive way.

The Paymaster General and Minister for Employment (Mr. Kenneth Clarke): Last month saw the third successive fall in the seasonally adjusted level of unemployment and we have seen the largest three-month fall in the figures since 1973. At one point, I almost thought I heard grudging approval of that from the hon. Member for Kingston upon Hull, East (Mr. Prescott), but like most of his Back Bench colleagues he has responded to three months' encouraging news by trying to denigrate and discredit the figures which show that desirable trend.
The hon. Gentleman said that he did not want to debate the figures and I certainly do not wish to go through that whole debate again. At Question Time today I answered every question on the Order Paper about the figures and I answered in full. I will enter into correspondence with the hon. Gentleman, who is still in a complete muddle about the figures. So far as we can tell, the "Devon figures" to which he refers relate to an experiment being carried out at Newton Abbot in relation to availability for work and quarterly attendance for benefit. So far as we know, no one has ever been deprived of benefit as a result of that experiment, but I will happily deal with all those matters in correspondence with the hon. Gentleman and put the information in the Library.
The hon. Gentleman cannot undermine the encouraging trend which so worries Labour and Liberal Members, because total unemployment has indeed begun to fall. I will discuss availability testing, which has caused so much fuss, on another occasion, but that had not even come into effect nationally when the last figures for the quarter were produced for October. We have the highest level of vacancies since 1979 — more than 200,000 — and the figure is still rising. That is not affected by any of the changes, either. There is also an increase in the number of people employed.

Mr. Prescott: That is the community programme.

Mr. Clarke: The number employed has increased by more than a million since the last general election and by more than 200,000 in the last full year. The seasonally adjusted figures that we use for vacancies do not include the community programme. Time and again the hon. Member for Kingston upon Hull, East makes rash assertions on the spur of the moment which do not stand up to examination.
Total employment has now been rising for 13 successive quarters. That steady increase is the best that we have seen for a generation in this country. Of course, we need to do better than that. I agree with my right hon. Friend the Member for Henley (Mr. Heseltine) and my hon. Friend the Member for Wyre Forest (Mr. Bulmer) that unit costs are still too high and that we must break some of the had traditions of British wage bargaining to accelerate the growth of new jobs.

Mr. Dave Nellist: rose—

Mr. Clarke: That does not mean a low wage economy. We want a high wage, high productivity, high performance economy but the high productivity and performance must come before the high wages to keep unit costs in line with profits.

Mr. Nellist: Will the Minister give way?

Mr. Clarke: I know that the hon. Gentleman was unlucky in not being called in the debate, but I am afraid that I must press on.
I wish to address myself to the problem underlying all that has been said about employment today. Unemployment is too high. That is why I take comfort in the trend now being established, which the Government seek to maintain and accelerate. When people try to analyse the problem and make speeches of the kind that we have heard from the Opposition today, they seem to forget that a total of 3 million unemployed, which is where we are, represents a high level of flow into and out of employment. It is not a standing army of 3 million people


who are out of work all the time. Last month, for example, 521,400 people left the ranks of the unemployed while 434,800 joined those ranks. The difference produced an encouraging 95,743 fall in the headline total. Most of the people who had become unemployed for the first time were, willingly or unwillingly, between jobs. Half of them will have found jobs within three months and eight out of 10 will have found a new job within one year. That is why we concentrate on the long-term unemployed.
When considering how the economy is performing and trying to understand why the Government are emphasising the long-term unemployed in their unemployment policies, we should be aware that about 88 to 89 per cent. of our labour force is in work at any given time. Some hon. Members have deprecated the fact that people in work are getting better off all of the time. About 11 to 12 per cent. —at the moment 11·7 per cent.—are out of work, but many are willingly or unwillingly between jobs. It is the more than I million long-term unemployed — 4·9 per cent. of the work force—who are the social problem to whom we should address ourselves, and about whom the hon. Member for Jarrow (Mr. Dixon) made an entertaining, but slightly inaccurate, speech.
It is the core of long-term unemployed people who are suffering the hardship of being unable to share the rising living standards which the vast majority of the rest of the population are beginning to enjoy. That is why we have made the long-term unemployed the target of our effort. They have replaced, as our first priority, the young unemployed.

Mr. Laurie Pavitt: rose—

Mr. Clarke: I shall not give way. They have replaced the young unemployed as our number one priority because youth unemployment is now steadily improving. The number of under-25s out of work has gone down by more than 60,000 during the past year. The rate for the under-25s has dropped, although it is still too high, to under 19 per cent., which is well below the European Community average. With the youth training scheme and other efforts, we are experiencing a steady drop in unemployment among the under-20s — about 20 per cent. during the past three years.
Now that the economy is growing and the country is getting wealthier, we must not develop a society in which a large core of workers prosper in the labour market while on the periphery there are people who have been allowed to drop out of the labour market altogether. That is where the package of policies that we call restart fit in.
Opposition Members, who express concern about this long-term unemployed group of people who are at risk of dropping out of the labour market altogether, should consider what they say and the effect of their actions when they denigrate the restart programme and the attempt to help the long-term unemployed.
It is almost wicked to attack restart, because it demoralises the staff whom we have taken on to help the long-term unemployed, and it puts off those whom we are trying to help. We are tackling the problem of long-term unemployment because the growth in employment and vacancies is making it steadily easier to give them positive assistance. Opposition Members have not even bothered to visit their jobcentres and to get in touch with people to find out the difference between the various proposals.
The hon. Member for Jarrow, whose constituency I know well—I have considerable concern for unemployment there — made an entertaining and witty speech about what he called "these job clerks", who he thought were the sum of the restart programme and were giving no help. He was led astray by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) who has said that jobclubs are places where young people get together and talk about employment.
Jobclubs are the beginning of what we are doing. They are an idea that we imported from America. Long-term unemployed people are brought together each day and apply for at least 10 jobs a day. They have the skilled support of somebody in the jobcentre and receive the support of free correspondence, free telephones and advice.
I first came across these jobclubs when they were being tried out in the north-east — in Durham and Middlesbrough. We are now spreading them very rapidly. The hon. Member for Jarrow dismissed all his and said that we should talk about people rather than statistics. I have with me a press notice issued today by the Sunderland jobclub, which is not far from the hon. Gentleman's locality. That club has now been operating for 15 months and out of 145 people who went along, 105 have now got jobs—[HON. MEMBERS: "Hear, hear."] They celebrated their century with a man who got a job as a heavy goods vehicle driver. It is utter rubbish to say that these are skivvy jobs. they are real jobs.
Labour Members must realise that as the economy expands— [Interruption.] The Opposition do not want to listen because they are seeking to discredit the figures and the schemes that they have inaccurately described.
There is a mismatch between the long-term unemployed seeking the work and the jobs that are increasingly available in the economy. Often there is a combination of people on the one hand who have given up looking for work, who are not good at searching for it or who lack essential skills and, on the other, of employers who cannot find workers. Not all such employers are poujadistes or hard-liners. There is a genuine difficulty in the system. That is why we have introduced our restart programme, which offers jobs, work experience, training and subsidised self-employment. It is having considerable success.
On top of the £3 billion worth of employment and training schemes in the Department, we have only recently announced an extension of jobclubs to 1,000 throughout the country. We shall extend restart in pilot areas for those who have been out of work for six months or more, and we are piloting the new job training scheme which will guarantee a training place to every long-term unemployed person under the age of 25.

Mr. Leighton: rose—

Mr. Nellist: I am here as well.

Mr. Clarke: I give way to the hon. Member for Newham, North-East (Mr. Leighton).

Mr. Leighton: I am grateful to the Paymaster General. We are listening to him closely, and I agree that we should all visit our local jobcentres. I have visited mine and have discovered that of more than 3,200 people interviewed, only 24 have got jobs.

Mr. Clarke: That is a grotesque and deliberate underestimate of what has been produced. The hon.


Gentleman has mentioned the figures for those who have been referred directly from the interview to a job. Such numbers are quite small because we are talking about people who have been out of work for 12 months whom the interviewer has fixed up with a job. The hon. Gentleman knows that he must add all those who have gone on to the community programme, work experience, training, the enterprise allowance scheme and restart advice sessions. He also knows that most of those who attend restart courses do not report back. We do not know where the people who have come off the register have got jobs or training. However, the hon. Gentleman is taking the narrowest and most inaccurate figure that he can find in an attempt to denigrate what we have done.
We undertook a preliminary survey in the pilot areas because we wanted to know what was happening. I have not relied on the results too heavily, but we chased up those who had gone off the register since our first pilots and scarcely believed the results ourselves. When asked why they had stopped claiming benefits, 60 per cent. replied that they had got a job. We shall follow that survey up to see whether that is so.
This placing of people through the employment services into the economy—which Labour and Liberal Members spend most of their time trying to denigrate — flows from the success of the mainstream economy, which has been expanding for six successive years and is beginning to absorb back into our labour market all those with skills and training as well as an increasing number of young people and long-term unemployed. Within that macroeconomic policy on which all, in the end, depends, is the growth that my right hon. Friend the Secretary of State describes.
Many hon. Members — largely Conservative Members, including my right hon. Friend the Member for Henley and my hon. Friends the Members for Macclesfield (Mr. Winterton) and for Devizes (Mr. Morrison), but also the right hon. and learned Member for Monklands, East (Mr. Smith) — concentrated particularly on the key role of the manufacturing sector in our economy. They pressed that we should give proper priority to it. I wholly agree with all those who stressed the importance of continuing to restore the strength of the manufacturing sector of our economy. It must play a key role in our recovery. It is essential that the efficient production of manufactured goods contributes to the country's wealth.
As my right hon. Friend the Member for Henley said, one is talking about reversing a position which began, not in 1979—he measured it in terms of the loss of our share of world trade — but at the beginning of this century. This debate has taken place in the Chamber on and off for a long time, and my right hon. Friend the Secretary of State addressed himself to that. We do not throw our hats in the air, but it is encouraging that, since 1981, to use the yardstick of my right hon. Friend the Member for Henley, manufacturing industry has successfully held its share of world trade. We are seeing an increase in manufacturing output and manufacturing investment. and, obviously, we must sustain that.
I do not get excited about whether we use the term industry or strategy. I am somewhat biased against the words "industrial strategy" because when I was in opposition in the late 1970s I had to shadow the so-called

industrial strategy of our predecessors, which was the most profligate and senseless strewing around of Industry Act money to every sector of the economy.
We shall observe the contents of the strategy put forward by my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour), and where we agree with them we shall adopt them. Although we see a continued strengthening of our manufacturing base, that in itself will not be an answer to our employment problems. No one must misunderstand that. We are fully committed to the manufacturing sector, but, as the Leader of the Opposition conceded in a speech only two weeks ago, we cannot look to the manufacturing sector to be the major source of new employment. [Interruption.] The proportion of people working in manufacturing has been falling in every modern economy for years and it will continue to fall even if output, wealth and earnings are maintained. That is happening here and in other developed countries.
We must not simplify the matter. We want to maintain manufacturing employment, but we must look to areas where quicker growth can be expected in a modern economy. That includes the service sector, high technology industries, more personalised products, less mass production, more small and medium-sized business, greater self-employment, and more people working part-term and on short-time contracts. We must develop a flexible, modern labour market. That is the type of labour market that we shall have in the 1990s, if we are successful. The Opposition resist it and say that it is not producing real jobs. They mean that it is not producing unionised jobs in traditional heavy industry, on which their power base depends. That is history, and is not to do with the Conservative party, or the Government. It is economic development which is very much against them.
I agree completely with all those who placed emphasis on training and education, which are the key background to a recovery in manufacturing and every other sector of the economy. We have devoted enormous effort to that. My hon. Friend the Member for Langbaurgh (Mr. Holt) talked about schools and, the TVEI, and said that an increase in technical and vocational education was essential. YTS is the achievement of the Government. I agree with the hon. Member for Stockton, South (Mr. Wrigglesworth) that we must achieve a two-year YTS scheme which gives a definite step towards a useful qualification. We must also consider adult training. We are developing open learning. I must say to my hon. Friend the Member for Devizes that the decline in apprenticeships is due to a decline in traditional training. Modern training is the sort that we must develop. We are introducing the new job training scheme. We are spending £270 million a year on adult training, helping 250,000 people, but I agree that we must continue to exhort British industry to do more, as the best and most profitable industry does.
However, the hon. Member for Kingston upon Hull, East reiterated, with a certain grim intensity, that his method of boosting training is to bring back levies—at least 1 per cent. — and, he implied, without the exemptions that were available in the 1970s for those who carried out the training. The hon. Gentleman cited Geoffrey Holland, who has made speeches as I and my right hon. Friend the Secretary of State have, saying that British industry does not invest a high enough proportion of its turnover in training. Geoffrey Holland is not in favour of levies.

Mr. Prescott: Yes he is.

Mr. Clarke: No he is not. It is no good the hon. Member making policy on his feet in a by-election in Knowsley, getting himself in a mess and citing in support an authoritative person who does not agree with him. I was in the Conservative Government that introduced levies and grants. I was in the Conservative Government that abolished levies and grants and most of the training boards because they did not work. The effect of what the hon. Member is proposing is not that Jaguar will be allowed to carry on spending its 1 per cent. on training but that the Government or an agency will collect at least 1 per cent. from each company and perhaps redistribute some of it back. That is a £6 billion exercise in bureaucracy, as the last one became, and the money will not go to training. We all know that Mrs. Barbara Castle gave us the Humber bridge to win Kingston upon Hull, North. Knowsley, North was never worth £6 billion. The hon. Gentleman should not make promises like that, but he does it all the time.
When we had a debate in March, the hon. Gentleman and his colleagues, the right hon. and learned Member for Monklands, East and the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), were stuck to find a policy that lives up to the daft claim that the Labour party knows how to take I million people off the unemployment list, and something turns up every week as they try to justify that claim. In March, the hon. Gentleman promised a detailed policy within 12 months, but we have not got it.

Mr. Prescott: It is not a year yet.

Mr. Clarke: Only four months are left.
The hon. Gentleman is sticking to levies — he has given up nationalised industries, and the postmen will not deliver the letters in pairs — and has turned to local authorities. Two weeks ago he went to Southwark, a council with which I am trying to work. I go to north Peckham more often than he does, and I am trying to get Southwark to co-operate in MSC programmes and trying to get work experience and training there. We have given Southwark partnership authority status and have put money into the estate about which the hon. Gentleman talked. He wanted a shop, and we have put in £1 million to refurbish the blasted buildings!
Southwark is now a source of the hon. Member's policy. It has produced a detailed plan which it says will create 6,000 jobs in two years, at a cost of £9,000 each. The hon. Gentleman became lyrical and said that it was an ambitious programme that is very realistic. He said that under Labour, local authorities will be the engines of growth in our economy, and that the Southwark document was the best thing that had happened on the employment front for a long time. He endorsed that again today. Of those 6,000 jobs, about 4,500 will be in the council. It even includes a bigger personnel department to cope with the other new jobs in other departments. The council says:
The new wage earners will have £28·5 million to spend in Southwark's shops, creating more private sector jobs.
There would not be any shops left after Southwark had put up the rates.
This is nonsense policy. We have a policy of growth and recovery and we are steering the unemployed back into jobs. The trend is going against the hon. Gentleman. I ask the House to reject the amendment.

Question put, That the amendment be made:—

The House divided: Ayes 197, Noes 348.

Division No.1]
[10 pm


AYES


Abse, Leo
Garrett, W. E.


Adams, Allen (Paisley N)
Gilbert, Rt Hon Dr John


Alton, David
Godman, Dr Norman


Anderson, Donald
Golding, Mrs Llin


Archer, Rt Hon Peter
Gould, Bryan


Ashley, Rt Hon Jack
Gourlay, Harry


Ashton, Joe
Hamilton, James (M'well N)


Atkinson, N. (Tottenham)
Hamilton, W. W. (Fife Central)


Bagier, Gordon A. T.
Hancock, Michael


Banks, Tony (Newham NW)
Hardy, Peter


Barnett, Guy
Harrison, Rt Hon Walter


Barron, Kevin
Hart, Rt Hon Dame Judith


Beckett, Mrs Margaret
Healey, Rt Hon Denis


Beith, A. J.
Heffer, Eric S.


Bell, Stuart
Home Robertson, John


Benn, Rt Hon Tony
Howarth, George (Knowsley, N)


Bennett, A. (Dent'n &amp; Red'sh)
Howell, Rt Hon D. (S'heath)


Bermingham, Gerald
Howells, Geraint


Bidwell, Sydney
Hughes, Dr Mark (Durham)


Blair, Anthony
Hughes, Roy (Newport East)


Boothroyd, Miss Betty
Hughes, Sean (Knowsley S)


Boyes, Roland
Hughes, Simon (Southwark)


Bray, Dr Jeremy
Janner, Hon Greville


Brown, Hugh D. (Provan)
Jenkins, Rt Hon Roy (Hillh'd)


Brown, N. (N'c'tle-u-Tyne E)
John, Brynmor


Brown, R. (N'c'tle-u-Tyne N)
Jones, Barry (Alyn &amp; Deeside)


Brown, Ron (E'burgh, Leith)
Kinnock, Rt Hon Neil


Bruce, Malcolm
Kirkwood, Archy


Buchan, Norman
Lambie, David


Caborn, Richard
Lamond, James


Callaghan, Rt Hon J.
Leadbitter, Ted


Callaghan, Jim (Heyw'd &amp; M)
Leighton, Ronald


Campbell, Ian
Lewis, Ron (Carlisle)


Campbell-Savours, Dale
Lewis, Terence (Worsley)


Canavan, Dennis
Litherland, Robert


Carlile, Alexander (Montg'y)
Livsey, Richard


Carter-Jones, Lewis
Lloyd, Tony (Stretford)


Clark, Dr David (S Shields)
Lofthouse, Geoffrey


Clarke, Thomas
Loyden, Edward


Clay, Robert
McCartney, Hugh


Clelland, David Gordon
McDonald, Dr Oonagh


Clwyd, Mrs Ann
McGuire, Michael


Cocks, Rt Hon M. (Bristol S)
McKay, Allen (Penistone)


Cohen, Harry
McKelvey, William


Coleman, Donald
MacKenzie, Rt Hon Gregor


Conlan, Bernard
Maclennan, Robert


Corbyn, Jeremy
McNamara, Kevin


Craigen, J. M.
McTaggart, Robert


Cunliffe, Lawrence
McWilliam, John


Cunningham, Dr John
Madden, Max


Davis, Terry (B'ham, H'ge H'l)
Marek, Dr John


Deakins, Eric
Marshall, David (Shettleston)


Dewar, Donald
Martin, Michael


Dixon, Donald
Mason, Rt Hon Roy


Dobson, Frank
Maxton, John


Dormand, Jack
Maynard, Miss Joan


Douglas, Dick
Meacher, Michael


Duffy, A. E. P.
Meadowcroft, Michael


Dunwoody, Hon Mrs G.
Michie, William


Eadie, Alex
Mikardo, Ian


Eastham, Ken
Millan, Rt Hon Bruce


Evans, John (St. Helens N)
Morris, Rt Hon A. (W'shawe)


Fatchett, Derek
Nellist, David


Faulds, Andrew
Oakes, Rt Hon Gordon


Field, Frank (Birkenhead)
O'Brien, William


Fields, T. (L'pool Broad Gn)
O'Neill, Martin


Fisher, Mark
Owen, Rt Hon Dr David


Flannery, Martin
Park, George


Foot, Rt Hon Michael
Parry, Robert


Forrester, John
Patchett, Terry


Foster, Derek
Pavitt, Laurie


Fraser, J. (Norwood)
Pendry, Tom


Freeson, Rt Hon Reginald
Penhaligon, David


Freud, Clement
Pike, Peter






Powell, Raymond (Ogmore)
Smith, Rt Hon J. (M'ds E)


Prescott, John
Spearing, Nigel


Radice, Giles
Steel, Rt Hon David


Randall, Stuart
Stewart, Rt Hon D. (W Isles)


Raynsford, Nick
Stott, Roger


Redmond, Martin
Strang, Gavin


Rees, Rt Hon M. (Leeds S)
Thomas, Dr R. (Carmarthen)


Richardson, Ms Jo
Thorne, Stan (Preston)


Roberts, Ernest (Hackney N)
Tinn, James


Robertson, George
Torney, Tom


Robinson. G. (Coventry NW)
Wainwright, R,


Rogers, Allan
Wallace, James


Rooker, J. W.
Wardell, Gareth (Gower)


Ross, Ernest (Dundee W)
Wareing, Robert


Ross, Stephen (Isle of Wight)
Welsh, Michael


Rowlands, Ted
White, James


Ryman, John
Wigley, Dafydd


Sedgemore, Brian
Williams, Rt Hon A.


Sheerman, Barry
Wilson, Gordon


Sheldon, Rt Hon R.
Winnick, David


Shields, Mrs Elizabeth
Woodall, Alec


Shore, Rt Hon Peter
Wrigglesworth, Ian


Short, Ms Clare (Ladywood)



Short, Mrs R.(W'hampt'n NE)
Tellers for the Ayes:


Silkin, Rt Hon J.
Mr. Chris Smith and


Skinner, Dennis
Ron Davies.


NOES


Adley, Robert
Carttiss, Michael


Aitken, Jonathan
Cash, William


Alexander Richard
Chalker, Mrs Lynda


Alison, Rt Hon Michael
Channon, Rt Hon Paul


Amery, Rt Hon Julian
Chapman, Sydney


Amess, David
Chope, Christopher


Ancram, Michael
Clark, Hon A. (Plym'th S'n)


Arnold, Tom
Clark, Dr Michael (Rochford)


Ashby, David
Clark, Sir W. (Croydon S)


Aspinwall, Jack
Clarke, Rt Hon K. (Rushcliffe)


Atkins, Rt Hon Sir H.
Clegg, Sir Walter


Atkins, Robert (South Ribble)
Cockeram, Eric


Atkinson, David (B'm'th E)
Colvin, Michael


Baker, Rt Hon K. (Mole Vall'y)
Conway, Derek


Baker, Nicholas (Dorset N)
Coombs, Simon


Baldry, Tony
Cope, John


Banks, Robert (Harrogate)
Cormack, Patrick


Batiste, Spencer
Corrie, John


Beaumont-Dark, Anthony
Cranborne, Viscount


Bellingham, Henry
Critchley, Julian


Bendall, Vivian
Crouch, David


Benyon, William
Currie, Mrs Edwina


Bevan, David Gilroy
Dickens, Geoffrey


Biffen, Rt Hon John
Dorrell, Stephen


Biggs-Davison, Sir John
Douglas-Hamilton, Lord J.


Blackburn, John
Dover, Den


Body, Sir Richard
du Cann, Rt Hon Sir Edward


Bonsor, Sir Nicholas
Dunn, Robert


Bottomley, Peter
Dykes, Hugh


Bottomley, Mrs Virginia
Edwards, Rt Hon N. (P'broke)


Bowden, A. (Brighton K'to'n)
Eggar, Tim


Bowden, Gerald (Dulwich)
Emery, Sir Peter


Boyson, Dr Rhodes
Evennett, David


Braine, Rt Hon Sir Bernard
Fairbairn, Nicholas


Brandon-Bravo, Martin
Fallon, Michael


Bright, Graham
Farr, Sir John


Brinton, Tim
Favell, Anthony


Brittan, Rt Hon Leon
Fenner, Dame Peggy


Brooke, Hon Peter
Finsberg, Sir Geoffrey


Brown, M. (Brigg &amp; Cl'thpes)
Fletcher, Alexander


Browne, John
Fookes, Miss Janet


Bruinvels, Peter
Forman, Nigel


Bryan, Sir Paul
Forsyth, Michael (Stirling)


Buchanan-Smith, Rt Hon A.
Forth, Eric


Budgen, Nick
Fox, Sir Marcus


Bulmer, Esmond
Franks, Cecil


Burt, Alistair
Fraser, Peter (Angus East)


Butler, Rt Hon Sir Adam
Freeman, Roger


Butterfill, John
Fry, Peter


Carlisle, John (Luton N)
Gale, Roger


Carlisle, Kenneth (Lincoln)
Galley, Roy


Carlisle, Rt Hon M. (W'ton S)
Gardiner, George (Reigate)





Gardner, Sir Edward (Fylde)
Lester, Jim


Garel-Jones, Tristan
Lewis, Sir Kenneth (Stamf'd)


Gilmour, Rt Hon Sir Ian
Lightbown, David


Glyn, Dr Alan
Lilley, Peter


Goodhart, Sir Philip
Lloyd, Sir Ian (Havant)


Goodlad, Alastair
Lloyd, Peter (Fareham)


Gorst, John
Lord, Michael


Gow, Ian
Luce, Rt Hon Richard


Gower, Sir Raymond
Lyell, Nicholas


Grant, Sir Anthony
McCrindle, Robert


Greenway, Harry
McCurley, Mrs Anna


Gregory, Conal
Macfarlane, Neil


Griffiths, Sir Eldon
MacKay, Andrew (Berkshire)


Griffiths, Peter (Portsm'th N)
MacKay, John (Argyll &amp; Bute)


Grist, Ian
Maclean, David John


Ground, Patrick
McLoughlin, Patrick


Hamilton, Hon A. (Epsom)
McNair-Wilson, M. (N'bury)


Hamilton, Neil (Tatton)
McNair-Wilson, P. (New F'st)


Hanley, Jeremy
Madel, David


Hannam, John
Major, John


Hargreaves, Kenneth
Malins, Humfrey


Harris, David
Malone, Gerald


Harvey, Robert
Maples, John


Haselhurst, Alan
Marland, Paul


Havers, Rt Hon Sir Michael
Marlow, Antony


Hawkins, Sir Paul (N'folk SW)
Marshall, Michael (Arundel)


Hawksley, Warren
Mates, Michael


Hayes, J.
Mather, Carol


Hayhoe, Rt Hon Barney
Maude, Hon Francis


Hayward, Robert
Mayhew, Sir Patrick


Heath, Rt Hon Edward
Mellor, David


Heathcoat-Amory, David
Merchant, Piers


Heddle, John
Meyer, Sir Anthony


Henderson, Barry
Miller, Hal (B'grove)


Heseltine, Rt Hon Michael
Mills, Iain (Meriden)


Hickmet, Richard
Mills, Sir Peter (West Devon)


Hicks, Robert
Mitchell, David (Hants NW)


Higgins, Rt Hon Terence L.
Moate, Roger


Hind, Kenneth
Monro, Sir Hector


Hirst, Michael
Montgomery, Sir Fergus


Hogg, Hon Douglas (Gr'th'm)
Moore, Rt Hon John


Holland, Sir Philip (Gedling)
Morrison, Hon C. (Devizes)


Holt, Richard
Morrison, Hon P. (Chester)


Hordern, Sir Peter
Moynihan, Hon C.


Howard, Michael
Mudd, David


Howarth, Alan (Stratf'd-on-A)
Neale, Gerrard


Howarth, Gerald (Cannock)
Nelson, Anthony


Howe, Rt Hon Sir Geoffrey
Neubert, Michael


Howell, Rt Hon D. (G'ldford)
Nicholls, Patrick


Howell, Ralph (Norfolk, N)
Normanton, Tom


Hubbard-Miles, Peter
Norris, Steven


Hunt, David (Wirral W)
Onslow, Cranley


Hunt, John (Ravensbourne)
Oppenheim, Phillip


Hunter, Andrew
Ottaway, Richard


Hurd, Rt Hon Douglas
Page, Richard (Herts SW)


Irving, Charles
Patten, Christopher (Bath)


Jackson, Robert
Patten, J. (Oxf W &amp; Abgdn)


Jenkin, Rt Hon Patrick
Pattie, Geoffrey


Jessel, Toby
Pawsey, James


Johnson Smith, Sir Geoffrey
Peacock, Mrs Elizabeth


Jones, Gwilym (Cardiff N)
Percival, Rt Hon Sir Ian


Jones, Robert (Herts W)
Pollock, Alexander


Joseph, Rt Hon Sir Keith
Portillo, Michael


Kellett-Bowman, Mrs Elaine
Powell, William (Corby)


Kershaw, Sir Anthony
Powley, John


Key, Robert
Prentice, Rt Hon Reg


King, Roger (B'ham N'field)
Price, Sir David


King, Rt Hon Tom
Prior, Rt Hon James


Knight, Greg (Derby N)
Pym, Rt Hon Francis


Knight, Dame Jill (Edgbaston)
Raffan, Keith


Knowles, Michael
Raison, Rt Hon Timothy


Knox, David
Rathbone, Tim


Lamont, Rt Hon Norman
Rees, Rt Hon Peter (Dover)


Lang, Ian
Renton, Tim


Latham, Michael
Rhodes James, Robert


Lawler, Geoffrey
Rhys Williams, Sir Brandon


Lawrence, Ivan
Ridley, Rt Hon Nicholas


Lawson, Rt Hon Nigel
Ridsdale, Sir Julian


Lee, John (Pendle)
Rifkind, Rt Hon Malcolm


Lennox-Boyd, Hon Mark
Rippon, Rt Hon Geoffrey






Roberts, Wyn (Conwy)
Thompson, Donald (Calder V)


Robinson, Mark (N'port W)
Thompson, Patrick (N'ich N)


Roe, Mrs Marion
Thome, Neil (Ilford S)


Rossi, Sir Hugh
Thornton, Malcolm


Rost, Peter
Thurnham, Peter


Rowe, Andrew
Townend, John (Bridlington)


Rumbold, Mrs Angela
Townsend, Cyril D. (B'heath)


Ryder, Richard
Tracey, Richard


Sackville, Hon Thomas
Trippier, David


Sainsbury, Hon Timothy
Trotter, Neville


St. John-Stevas, Rt Hon N.
Twinn, Dr Ian


Sayeed, Jonathan
van Straubenzee, Sir W.


Shaw, Sir Michael (Scarb')
Vaughan, Sir Gerard


Shelton, William (Streatham)
Viggers, Peter


Shepherd, Colin (Hereford)
Waddington, David


Shepherd, Richard (Aldridge)
Wakeham, Rt Hon John


Shersby, Michael
Waldegrave, Hon William


Silvester, Fred
Walden, George


Sims, Roger
Walker, Rt Hon P. (W'cester)


Skeet, Sir Trevor
Wall, Sir Patrick


Smith, Tim (Beaconsfield)
Waller, Gary


Soames, Hon Nicholas
Walters, Dennis


Speed, Keith
Ward, John


Speller, Tony
Wardle, C. (Bexhill)


Spencer, Derek
Watson, John


Spicer, Jim (Dorset W)
Watts, John


Spicer, Michael (S Worcs)
Wells, Sir John (Maidstone)


Squire, Robin
Wheeler, John


Stanbrook, Ivor
Whitfield, John


Stanley, Rt Hon John
Whitney, Raymond


Steen, Anthony
Wiggin, Jerry


Stern, Michael
Wilkinson, John


Stevens, Lewis (Nuneaton)
Winterton, Mrs Ann


Stewart, Allan (Eastwood)
Winterton, Nicholas


Stewart, Andrew (Sherwood)
Wolfson, Mark


Stewart, Ian (Hertf'dshire N)
Wood, Timothy


Sumberg, David
Yeo, Tim


Tapsell, Sir Peter
Young, Sir George (Acton)


Taylor, John (Solihull)
Younger, Rt Hon George


Taylor, Teddy (S'end E)



Tebbit, Rt Hon Norman
Tellers for the Noes:


Temple-Morris, Peter
Mr. Robert Boscawen and


Thatcher, Rt Hon Mrs M.
Mr. Tony Durant.

Question accordingly negatived.

Debate to be resumed tomorrow.

WELSH GRAND COMMITTEE

Ordered,
That, during the proceedings on the matter of the Queen's Speech and its effect on Wales, the Welsh Grand Committee have leave to sit twice on the first day on which it shall meet; and that, notwithstanding the provisions of Standing Order No. 88 (Meetings of standing committees), the second such sitting shall not commence before Four o'clock nor continue after the Committee has considered the matter for two hours at that sitting.—[Mr. Cope.]

Mr. Mordechai Vanunu

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Portillo.]

Mr. Dennis Walters: The case that I raise tonight concerning Mordechai Vanunu is mysterious and disturbing. It merits being discussed in the House, as it touches on important issues affecting the law of this country. I believe that there should be a full investigation into all the circumstances surrounding Mr. Vanunu's arrival, stay in and departure from the United Kingdom. There is understandable and widespread public concern about this matter, which has been reflected in Parliament and in the press. My right hon. Friend the Home Secretary should now set up an investigation as a matter of urgency.
Mordechai Vanunu is an Israeli citizen who, having left his country, eventually came to London and while here, produced damaging revelations about the secret development by Israel of a nuclear strike capability, which were published in The Sunday Times on 5 October. Although the information was already known in so-called well-informed circles, the extent of the programme at Dimona came as somewhat of a surprise. In any event, it all came as a complete surprise to the general public.
Some time between 30 September and 5 October, Mr. Vanunu disappeared from his hotel, and from that moment on nothing more was heard of him or from him, either by his journalistic contacts in London or by his friends in Australia. There was a spate of rumours suggesting that he had been kidnapped and spirited back to Israel. Several stories to that effect appeared in the press. I tabled questions to the Foreign and Home Secretaries, as did several of my hon. Friends and other hon. Members. The replies that we received were negative and, on the whole, uninformative: their essence being that there was no evidence to suggest that Mr. Vanunu had been abducted against his will or that he was in Israel.
At that time, the Israeli authorities were consistently denying any knowledge of Mr. Vanunu's whereabouts. Those authorities were lying, because unexpectedly, on 9 November, they announced that Mr. Vanunu was in prison in Israel, and, as it happened, he had been in prison there when they were issuing their categorical denials about him.
There were two obvious motives for the Israelis wanting to capture Mr. Vanunu and to take him back to Israel. The first was in order to punish him for what he had done, which the Israelis looked upon as an act of treachery; the second was to prevent him from continuing to publicise the damaging information about Israel's nuclear weapons programme. It was the kind of publicity that could only harm the "peace-loving image", spread with remarkable success by Israeli propaganda, in spite of being at variance with the facts.
Naturally, the possession by Israel of a nuclear bomb, Israel not being a signatory of the non-proliferation treaty, was a matter of great public interest and concern. Although it has been mooted in certain quarters that Mr. Vanunu was an Israeli agent and that the pupose of his revelations about the extent of Israel's nuclear capacity was to frighten Arab and other states in the area, these suggestions seem far fetched and improbable.
My hon. and learned Friend the Minister of State will be aware that Zionist terrorism goes back a long way in


time and that violence and violation of international law are not alien to the present Israeli leadership. More recently—since the late 1960s—there have been at least 10 assassinations, or attempted assassinations, in Europe of leading Palestinians which have been claimed by Israeli avenger squads and organised by Mossad.
One of the most elaborate incidents was in Norway in June 1973, when 10 Mossad agents were sent to track down a Palestinian, Mr. Ali Hassam Salameh. The squad was supervised by General Zamir, who had gone to Oslo for the purpose. The agents struck in Lilliehammer, where a man and a woman shot down their suspect as he walked along a road. It was the wrong man; the victim was a Moroccan waiter. Several members of the avenger squad were arrested, hut Zamir and his aides escaped.
A very recent example was the kidnapping of Mr. Dikko, the Nigerian politician who was eventually discovered in a crate at Stansted airport with an Israeli agent sitting beside him holding a hypodermic needle.
In these circumstances Her Majesty's Government should not be too complacent about the assurances that they receive from the Israeli Government, and in this respect I was disappointed with what my hon. Friend the Minister of State, Foreign and Commonwealth Office, had to say on the subject when he replied to the foreign affairs debate last Friday.
We know that Mordechai Vanunu was met by an "Insight" reporter at Sydney airport to bring him back to London on 11 September. He remained in London, staying at different hotels for several weeks. He was in England on 23 September when he spoke to representatives of The Sunday Times at Wapping and maintained contact with the newspaper during the following week. In one of his last calls he said that he was frightened of being kidnapped. Some time after that he disappeared. We know now that he is in an Israeli prison.
There are several ways in which Mordechai Vanunu could have found himself in an Israeli prison, but one that can be ruled out is that he reached there of his own free will. It follows logically that he must have been abducted, and almost without doubt by Israeli agents.

Mr. Ivan Lawrence: My hon. Friend seems to rule out any voluntary leaving. Is he aware that the "Insight" team of The Sunday Times has examined this matter and last week produced an article asking:
How was Mordechai Vanunu, the man who gave The Sunday Times the secrets of Israel's nuclear arsenal, spirited 3,000 miles from London to a top security prison south of Tel Aviv?
It answered the question by stating that, after its investigation, the
assumption must be that Vanunu was somehow lured offshore by 'Cindy'.
I am as concerned as he is about any illegality that might take place on British soil. The "Insight" team is Vanunu's sponsor and has investigated the matter. It concluded that he went because he was lured by some girl and that no blame attaches to the British authorities. Why does my hon. Friend—who is a Conservative Member—seek to make mischief not only for the Israeli Government but for the British Government?

Mr. Walters: That intervention by my hon. and learned Friend was rather long. [AN HON. MEMBER: "But very much to the point."] It was not to the point, because there have been several speculative theories and this is one of them.

Mr. Michael Carttiss: It was the "Insight" team.

Mr. Walters: The "Insight" team has put forward several speculative stories, and this is one of them. I am sure that my hon. and learned Friend the Minister will wish to repudiate once again the offensive slur that our security services connived at Mr. Vanunu's removal. I do not intend to pursue the various hypotheses explored in the press, because it does not seem a profitable way for me to proceed in this debate.
The Home Secretary should immediately set up an investigation with the aim of trying to discover what happened to Mr. Vanunu in London and how he left Britain. At the same time, Her Majesty's Government should firmly press the Israeli Government to come clean and reveal how Mr. Vanunu was taken from his hotel in London to a top security prison in Israel where he is now being held.

Mr. Anthony Beaumont-Dark: There is an easy way for the Israeli Government to allay our fears. Could they not agree that an international jurist should interview Mr. Vanunu to find out how he left Britain and how he arrived in Israel? If the Israelis have nothing to fear, they should not be afraid of someone with an international reputation.interviewing Mr. Vanunu on this very point.

Mr. Walters: My hon. Friend, who has also taken a interest in this case, makes an interesting suggestion and no doubt my hon. Friend the Minister will deal with it. I shall now return to the point that I was making.
We know that Mr. Vanunu is now being held in an Israeli prison and that the Israelis know what happened, without any inquiry or investigation being necessary. The facts should be ascertained and we should not tolerate being fobbed off by patronising and dismissive statements.
It is for the British Government and, if necessary, for the British courts, to decide what constitutes a violation of British law. Her Majesty's Government should not tamely accept that the Israeli Government can simply inform us that our law has not been broken. There is a strong feeling of outrage among the British public at what may have occurred, and that feeling should not be underestimated. If a kidnapping or a conspiracy to kidnap has been carried out by agents of a foreign power on British soil we are entitled to know about it and to be satisfied that appropriate action will follow.

The Minister of State, Home Office (Mr. David Waddington): My hon. Friend the Member for West bury (Mr. Walters) has raised a topic that has attracted considerable interest in this House and in the press. The matter was discussed here only last Friday in the debate on the Address. I welcome this further opportunity to separate fact from speculation, even though in the short time that has elapsed since then there is little new to add.
Mr. Mordechai Vanunu is an Israeli citizen who claims to have been employed as a nuclear technician at Israel's Dimona nuclear plant. The circumstances of how he came into contact with The Sunday Times, the nature of his contract with that newspaper and the contents of his story as published, are not matters for the Government and I have no comment to make on those aspects.
I shall deal first with Mr. Vanunu's presence in this country and police inquiries about his disappearance. He


arrived here on 12 September 1986 and then for over two weeks stayed in and around London under arrangements made by The Sunday Times. He was last seen on the morning of Tuesday 30 September when he checked out of the Mountbatten hotel in St. Martin's lane and, according to the staff in the hotel, there was nothing unusual about his departure. But The Sunday Times says that he telephoned that morning and told the telephonist who answered that he was "frightened" and was going "to the country". At that stage, the police were unaware of any concern about Mr. Vanunu, and it was not until 8 October that The Sunday Times reported his disappearance—that is, eight days after he had last been seen at the Mountbatten hotel and three days after the newspaper's article on 5 October. There was no evidence that Mr. Vanunu had been abducted or that any crime had been committed. The police listed him as a missing person and the inquiries made thereafter were as a result of that missing person report. They have not at any stage been in possession of evidence of any crime connected with this case. I shall come back to that aspect later.
The immigration service has no record of Mr. Vanunu having left the United Kingdom under his own name since 30 September 1986. There has been speculation in the newspapers and elsewhere that the absence of any such record, taken with information that Mr. Vanunu is in Israel, gives grounds for suspicion. I must make it clear that the absence of any record of departure proves nothing. Checks on persons leaving the country are selective. No attempt is made to record names of all those leaving, and I remind the House that it was not until eight days after Mr. Vanunu was last seen that he was first reported missing.
The inquiries made by the police are, of course, a matter for them. There is no doubt that they would investigate thoroughly any evidence of crime made known to them, and it was for that reason that I said on 3 November, in reply to a question by my hon. Friend the Member for Northampton, North (Mr. Marlow), that anyone having evidence that an offence had been committed should inform the police.

Mr. Beaumont-Dark: My hon. and learned Friend's comments are somewhat disturbing. The Home Office seems to be certain about when Mr. Vanunu came to this country, but my hon. and learned Friend calmly says that, once people are here, the Home Office does not know whether they have gone or whether people come and go. Is he actually saying that we solemnly mark the people who come here in and then do not care a damn whether they have left or how they have gone? How many people are here who should not be here? Why bother to mark them in if we cannot bother to mark them out?

Mr. Waddington: We know the date on which Mr. Vanunu entered this country because he did so in the company of someone from The Sunday Times who can give evidence to that effect. It would be quite impossible for us to record the departure from this country of everyone who enters. In fact, 35 million people leave this country every year. No country with that sort of traffic of persons in and out could possibly record the arrival and departure of everyone. Just as we have no record of Mr. Vanunu's departure, I doubt very much that we have any

record of his arrival. We do not have to look at any record of his arrival because we know the date, for the reasons I have mentioned.

Mr. Keith Speed: My hon. and learned Friend has just said that he doubts whether there is any record of Mr. Vanunu's arrival. If I understand correctly, any non-EEC citizen flying to this country has to fill in a card on the aircraft. What is the point of everybody doing that if the cards are not used and there is no record?

Mr. Waddington: In this country we have always operated a system of recording those who enter on a selective basis. If we were to record on the computer everyone who entered, not only would the computer be overloaded, but the task of analysing the records that were kept would be ridiculous and out of proportion to the exercise to be carried. What has always happened is that one records entries on a computer on a selective basis, recording those whose entry it is considered should be recorded because there might be some likelihood of their not departing at the appropriate time. However, as I have said, that does not arise in this case because we know when this man arrived for a different reason.
The Foreign and Commonwealth Office had written in similar terms on 31 October to the editor of The Sunday Times. The fact is that no evidence pointing to any offence having been committed has been made available to the police, and no such evidence has been revealed by their own inquiries.
I refer to inquiries made by the Government. As is clear from what I have already said, nothing is known to us about Mr. Vanunu's movements from the time he checked out of his hotel on 30 September until the Israeli Government confirmed on 9 November that he was in Israel. In the early stages after the reporting of his disappearance there was much speculation that Mr. Vanunu had been kidnapped in the United Kingdom, or enticed to leave this country and then taken to Israel. Those reports were, however, entirely speculative and, until about 20 October, we had no reason to think that Mr. Vanunu was in Israel, and no other evidence to suggest that the Israeli authorities were in any way involved.
It was on about 20 October that press reports appeared to the effect that Mr. Vanunu had been remanded in custody after being brought before a court in Jerusalem. An Israeli police spokesman denied those reports, but the Foreign and Commonwealth Office emphasised to the Israeli ambassador in London the need to clarify the position. It was apparently as a result of this that on 9 November a statement was made by the Israeli Government to the effect that Mr. Vanunu was under lawful detention in their country. The statement specifically denied that he was kidnapped on British soil

Mr. Walters: Does my hon. and learned Friend not find it surprising that the Israeli authorities continued to deny knowledge of the whereabouts of Mr. Vanunu when he was in an Israeli gaol and then made an announcement on 9 November? Does that not make it appear that they were being both deceitful and dishonest?

Mr. Waddington: I said that an Israeli police spokesman denied the reports that he was in custody but when the Israeli Government were approached by the Foreign and Commonwealth Office they then made the statement. The statement specifically denied that he was kidnapped on British soil.
On 10 November our ambassador in Tel Aviv was instructed to seek clarification from the Israeli Government as to how Mr. Vanunu came to be in Israel. The Government replied on 13 November in a formal statement, the terms of which were referred to by my hon. Friend the Member for Mid-Sussex (Mr. Renton) in the debate on Friday 14 November. The statement said that Mr. Vanunu left Britain of his own volition and through normal departure procedures, and that his departure involved no violation of British law.
Our ambassador also spoke to Mr. Vanunu's lawyer and asked him whether he could say how Mr. Vanunu left the United Kingdom. The lawyer responded by saying that he could not comment without permission from the Israeli authorities.
I understand that the Israeli Government also referred in its statement of 13 November to constraints resulting from the fact that criminal charges are pending in Israel. We recognise that this may impose some limitations on what the Israeli authorities can say about the case against Mr. Vanunu. Nevertheless, I certainly regard it as unsatisfactory that the Israeli authorities have declined to give any explanation of the circumstances, or even the date of his arrival in Israel.

Mr. Nicholas Soames: In view of the quite deplorable behaviour of the Israeli Government over the Dikko affair, will my hon. and learned Friend be a little less mealy-mouthed about their behaviour in this respect?

Mr. Waddington: I do not think that I can be accused of being mealy-mouthed, because all that I have done so far is record the facts. I have recorded the approach to the Israeli Government and the reply received from them. I have also said that I regard it as unsatisfactory that the Israeli authorities have declined to give any explanation of the circumstances or even the date of Mr. Vanunu's arrival in Israel. I do not call that being mealy-mouthed.

Mr. Robert Adley: Will my hon. and learned Friend give way?

Mr. Waddington: I must get on.
For example, we do not know whether it is true, as reported in the press, but denied by an Israeli police spokesman at the time, that Mr. Vanunu appeared in court on 20 October. It is difficult to see how a statement on such a matter could prejudice legal proceedings in Israel. But we note what the Israeli Government have said, and I am sure that the House will expect that when any sub judice constraints are removed, the Israeli Government will make the position clear.
I thought it right to set out the facts as known to us, and our inquiries of the Israeli Government, before coming to the main point raised by my hon. Friend the Member for Westbury in his speech. He is pressing for a full investigation of the circumstances surrounding Mr. Vanunu's arrival, stay and departure from this country. I share my hon. Friend's concern about this strange case,

but I am bound to say that I do not see what useful purpose would be served by any special formal type of inquiry, if that is what my hon. Friend has in mind.

Mr. Toby Jessel: Will my hon. and learned Friend give way?

Mr. Waddington: Not for the moment, because I must watch the clock. I shall give way in a few moments if possible.
Most recent speculation has concentrated on the possibility of Mr. Vanunu having been taken to Israel after being abducted somewhere outside the United Kingdom's jurisdiction, and I cannot see how it would be productive for the British Government to try to inquire into such a possibility, of which there is in any case no specific evidence. In relation to things happening outside United Kingdom jurisdiction, such an inquiry would have no powers, and no locus: it would be an empty gesture. If on the other hand—I believe this is what my hon. Friend the Member for Westbury is after—it is suggested that the primary purpose of such an inquiry would he to look into things that might have happened within United Kingdom jurisdiction, surely such an inquiry would merely risk causing confusion. The investigation of criminal offences in this country is a matter not for the Government but for the police. The police have already conducted some inquiries into the case, and I know that they will continue to follow up anything else that may need to be investigated in connection with it. If they were to find evidence of crime having been committed here, whether in the form of a substantive offence, or a conspiracy to commit an offence elsewhere in circumstances that gave rise to an offence under our law, any further action would be a matter for the prosecuting authorities, not for the Government.

Mr. Jessel: Is it not rather surprising that my hon. Friend the Member for Westbury (Mr. Walters) said that there was a strong sense of public outrage on this case, because in my constituency, which is exceptionally articulate, I have not had a single letter on it yet?

Mr. Waddington: The honourable House ought to be grateful to my hon. Friend the Member for Westbury for raising the matter on the Adjournment because undoubtedly it has been canvassed at great length in the press. It is right that I should have the opportunity to try to clear up some matters.
I understand my hon. Friend's concern. The statement that the Israeli Government made on 13 November shows that they know of the circumstances of Mr. Vanunu's departure from this country, and it appears that they have accepted responsibility for the circumstances of his return to Israel. Their silence on how he returned only prolongs speculation, and I hope, as my hon. Friend does, that they will put an end to that speculation, which is damaging to their interests, as soon as possible.
Question put and agreed to.
Adjourned accordingly at sixteen minutes to Eleven o'clock.